Tax Credits and Self Employed..Confused!!!

ktandspen

Hi All.
I am new here and I am hoping you can help me out. Hubby has just gone self employed and I am super confused about WFTC and working for yourself. Obviously we want to keep as much money in the business, first to repay the loan we took out to start up, secondly for new equipement, however I understand that if we leave it in the acc it will go against out WFTC so not only are we not receiving into our income this money but it is being counted against us?? So confused and not liking it..can anyone advise!? thanks!!

pipscot

ktandspen wrote: »

Hi All.
I am new here and I am hoping you can help me out. Hubby has just gone self employed and I am super confused about WFTC and working for yourself. Obviously we want to keep as much money in the business, first to repay the loan we took out to start up, secondly for new equipement, however I understand that if we leave it in the acc it will go against out WFTC so not only are we not receiving into our income this money but it is being counted against us?? So confused and not liking it..can anyone advise!? thanks!!

What do you exactly mean by "keeping the money"?

If your OH is self-employed, then tax credits are calculated on the net profit of his business (i.e. not on the drawings that you take out of the business). It does not matter if you take the money out for drawings or keep it in the business account, this will not affect the "net profit" in any way.

ihatebiffandchip

Hi
Not sure exactly what you mean but this is what I did...

ExH and I were self emplyed running a cafe. We were registered as a partnership. Basically, we did accounts for the business, detailing all income and expenses. At the end of the tax year, we filled out a parntership return with inland revenue in the name of our business. Then the profits were split between us 50:50. We then did our own personal tax return on our share. This was the figure that we gave to inland revenue, I mean whatever our 50% share was.

We then got tax credits based on that figure. The only difference with tax credits when you are self employed is that when they review the claims in June/July, you can ring up and give provisional figures and then give your accurate figures when you file your tax returns which is before January.

HTH

Sixer

If you are self employed, you need to declare your PROFIT for tax credits, not how much money you take to spend. The money you take to spend is called DRAWINGS and is not relevant. Your PROFIT is your TURNOVER less your ALLOWABLE EXPENSES and this is the figure you will be assessed on for tax credits. Note that loan repayments are not allowable expenses in self-employment.

(Capitals used just to highlight the terms that the OP could research further).

1111

I just declare profits, just deduct what you have had to spend on expences x