New Enterprise Allowance scheme - My story

carole6691

I have been on jobseekers allowance and was just about to start nea having had the business plan signed off.I had thought that I would get support for mortgage interest payments until the business was running at a profit,but after a telephone call to the benefits centre they have stated that housing benefit in terms of mortgage interest support is only available via job seekers allowance and as soon as you sign off that you would lose the mortgage support.
I just wanted to double check whether this was the same for others as for me this will make me double think when I go live due to the additional monies I will have generate to cover essentials and without support I risk losing my house which as a ingle parent is terrifying..
any input appreciated
thanks
Carole

tomterm8

As far as I know you are not entitled to Mortgage Interest Support, free prescriptions, free dental care and etc on NEA. You are entitled to working tax credit if you fulfill the other requirements.

You could ask your advisor to do several better off calculations.

As I understand it you will most likely have a shortfall, though, and be worse off in your situation unless your business makes enough profit.

dktreesea

If you are working, even if you qualify for working tax credits, you can only get a run on for four weeks for mortgage interest support, and even then only if you are coming of an income based benefit like income support or JSA.

You may be better off staying on JSA and limiting any work you do to 16 hours or less a week, if your new venture isn't likely to produce sufficient profits in the short term to cover your mortgage interest.

tomterm8

dktreesea wrote: »

If you are working, even if you qualify for working tax credits, you can only get a run on for four weeks for mortgage interest support, and even then only if you are coming of an income based benefit like income support or JSA.

You may be better off staying on JSA and limiting any work you do to 16 hours or less a week, if your new venture isn't likely to produce sufficient profits in the short term to cover your mortgage interest.

It is a very weird quirk in the system. i.e. if you don't own your own home you can get help with rent on NEA, but if you do own your home you get no help.

The frustrating thing is, if you do decide to go the under-16 hour route, you've got to keep your profit under the relevant amount for JSA IB NI contributions only benefit (I assume), otherwise you're in the same pickle.

dktreesea

tomterm8 wrote: »

It is a very weird quirk in the system. i.e. if you don't own your own home you can get help with rent on NEA, but if you do own your home you get no help.

The frustrating thing is, if you do decide to go the under-16 hour route, you've got to keep your profit under the relevant amount for JSA IB NI contributions only benefit (I assume), otherwise you're in the same pickle.

Which is ludicrous really, because someone who owns their own home and is paying a mortgage doesn't usually have access to the equity. There's almost an expectation that people who are becoming self employed should at some point be prepared to draw down that equity to fund their businesses.

It's strange, because people claiming housing benefit could use the interest on their business borrowings, if they were for working capital or to buy their stock, to lower their income and increase their claim for housing costs, - it even says in the current regulations that interest on business loans for working capital (as opposed to expanding the business) is an allowable expense for the purposes of assessing housing benefit.

If the government want people to move into self employment as a way back into work, are all those who have mortgages somehow excluded from the opportunity NEA represents, just because they can't afford to do without the mortgage interest support?

Stevenb

In January 2013 I had £300 saved up and when I pay my next tax bill in April it will be over £5000 ,ill let you figure out my profit.

Andy2013 , mate really nice figures your beating me, im at 3k tax or there abouts , be interested to know what plans you have from here, you mention expansion although you are expecting your first born soon so big congrats to you on that also.

I am gradually building up to moving from a home based business to a small industrial unit to hold stock , have more space etc., be good to get your ideas also.

Clearly your a business minded chap and a lot of your comments over the past few months should be noted by others , you speak sense.

Andy2013

Stevenb thanks for the comments the cheques in the post

Well for about 2 months my figures have pretty much levelled of to what I think is probably my max sales for this time of year, obviously xmas is massive and build up to that will begin in October.

Our little bundle of joy is due November so this year I think to avoid the risk I am going to continue as so for now and hit xmas hard which can potentially be the equivalent of 5 months in a matter of 3 weeks going on last years figures, I need to prepare better this year as last time I was not ready for just how crazy that selling period is.

I currently list approx. 400 items a month and sell 30-40 a week with each having a mark-up of between 400-600% , and even then I am still very competitive on price ,sometimes one of the lowest available on the site.

It all comes down to my buying efforts and doing the best deal I can to obtain my stock.

My stock is not terribly balky so at the moment and for the foreseeable future I will continue from home but 2015 is all about doubling what I do now , it will push me harder but i will give it a good bash.

I don't want to take a loan until i am desperate, it puts pressure on a business and paying it back would remove £200 a month so i will see how personal finances are and try to continue growth with just my own business rated profits.

That's the immediate plan/idea, of course we all know it rarely goes to plan but at the moment i am at a stand still with increased profits, im not complaining as i still make a good amount but i want to see how far this can go.

Stevenb

A very sensible outlook to be fair, no point rushing and risking what sounds like a very good business model.

My own margins are averaging 400% and this allows some variations in costs and means any sales have a healthy profit regardless of changes.

I agree with your punt on the loan, people forget it needs paying back and that money has to come from somewhere , an extra £200 a month may only work out as the extra sales offered by the stock purchased via the loan equalling more work, more chances of issues and of course more tax to pay with little personal reward at the end.

Its good to see such a positive result in what sounded like a useless NEA experience. :beer:

Andy2013

I think if I was working for someone else and earning what I do from my business I think I would be happy with my salary, working for myself I do feel differently because I know I can improve my earnings with more effort , at the same time I don't want to get to clever with ideas and put what I have in jeopardy.

Over the next 18 months hopefully I can increase sales without risking to much or borrowing .

The temptation to get a loan is hanging over me but from past experiences of bad credit I know its not sensible when my lively hood counts on it.

Stevenb

Fully agree, borrowing is the lead to a fall , especially if its not directly for stock, borrowing for marketing purposes is a disaster, you never make it back regardless of your intentions and I think from my own experiences it should be avoided.

I tried doing shows, etc. but the money never seems to come back in a large enough fashion to warrant the massive repayments that a loan brings and it will hang over you for years.

The same as if you take out a loan for a holiday in 2014 , at the time its lovely but do you want to pay for it until 2017, never clever.

The reason the country was screwed in the first place is because people borrowed what they could not pay back , and as you say andy2013 if your lively hood depends on it then you would be daft to borrow hugely.