New Enterprise Allowance scheme - My story

Andy2013

Hey WantToBeSE

I have been trading only since my JSA ended and my NEA began which is 2 weeks as i was informed that as your on JSA previous your only able to work the 16 hours and any work you do has to be declared and this is hassle so i waited to be signed of and then started to trade " legally " without upsetting the job centre.

My business is internet sales so i buy and sell on the internet and initally had about £250 to buy stock so as i sell i reinvest the profits to then buy in more stock and so far it is going well with daily sales increasing and profits gradually rising.

I also am happy that the loan did fail to materialse as i am debt free in my business and that is a nice feeling although the loan would have allowed me expand quicker , but overall its a good thing.

If your previous couple of years are low income or JSA then WTC and CTC are a boost and this takes a little stress out of the early days of starting to trade.

Along with the short term NEA payment its really down to the individual to motivate themselves and make a go of it.

Kepp pushing and good luck everyone.

BigAl127

Can anyone confirm the position with regards to working tax credits?

I have had my Business Plan approved, and during my visit to the jobcentre last week (to complete the NEA2), my adviser, says I can't get WTC unless i'm doing 30hrs PAID work in my business with my customers. Which till my business builds up I won't be. I was of the understanding, that as long as i'm doing 30 hours or more on such hings as advertising, marketing, visiting prospective clients, preparing documentation all count towards my 30 hrs. My adviser says not.

I intend to ring WTC to clarify the position, but just wanted to know other people's experiences.

Thanks in advance

BigAunty

You will find the HMRC website will help clarify what is classed as paid employment, even for the self employed, which should be in expectation of payment.

"paid work means any work you do for payment (or would expect to be paid) or profit...

If you're self-employed
Put down the number of hours you normally spend working in your business, either on work billed to the client or related activity, for example:

• trips to wholesalers and retailers
• visits to potential clients
• time spent on advertising
• cleaning the business premises
• cleaning a vehicle used as part of the business, for example a taxi
• book-keeping
• research work

If you work from home, include time spent travelling to see customers.

Work done in expectation of payment means more than a mere hope that payment will be made at a future date. There should be a probability rather than just a possibility that a payment will be made. If a person reasonably expects payments for work done then the condition is satisfied. However, if the person knew before starting the work that payment was unlikely to be made, the remunerative condition is not satisfied.
Work done setting a business up is not generally classed as being done in expectation of payment. A person will only reasonably expect to be paid for work done once the business is up and running.

http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/workingtaxcredit/work.htm#2

http://www.hmrc.gov.uk/taxcredits/start/claiming/income-hours/work-out-hours.htm

http://www.hmrc.gov.uk/manuals/tctmanual/TCTM02400.htm

BigAl127

Thanks for that info Big Aunty, some of which i'd previously seen, some of which I haven't.

My biggest problem is that I find some of it to be contradictory.

I intend to be a sole trader, and will be working in customers homes. However, till I start advertising, and getting calls in, which turn into paid work, it could be a month or two, before my cashflow allows me to take any drawings out of the business.

It seems that i'm expected to give up my JSA of £111.45 per week, to get NEA of £65 per week, with no other help available (I didn't apply for the loan as i didn't want to start off in debt). How I am expected to pay my household bills, till I can take drawings from the business?

I have every confidence in my business plan, and that by the end of year 1, I will be showing a reasonable profit, but where is the incentive/help to get me on the bottom rung of the ladder. Please don't tell me, that's what the £65 a week NEA is for.

BigAunty

BigAl127 wrote: »

...

My biggest problem is that I find some of it to be contradictory.

...

What's contradictory about it? It says quite clearly that WTC can't be claimed if a business is in the process of being set-up and has no customers but then when the claimant is fulfilling business related activities when launched, that WTC can be claimed.

BigAl127 wrote: »

...

It seems that i'm expected to give up my JSA of £111.45 per week, to get NEA of £65 per week, with no other help available

...

I'm not really familiar with the NEA scheme - is the £65 instead of or on top of JSA, does it ever run along side it for a period?

The NEA scheme says quite clearly that a claimant comes off JSA when the business is launched and started trading and the HMRC website says WTC is claimable after a business has been set up. So when is your business truly launched or is there some kind of staggered or soft launch?

BigAl127 wrote: »

...

I didn't apply for the loan as i didn't want to start off in debt.

...

Perhaps this is something you can revisit and produce a business plan where you actually have sufficient investment and cash flow upfront to overcome precisely the low income scenario until your business is more established? Perhaps you should see it less as a debt and more as an investment that gets paid back many times over? I don't know, I'm just musing.

BigAl127

BigAunty wrote: »

What's contradictory about it? It says quite clearly that WTC can't be claimed if a business is in the process of being set-up and has no customers but then when the claimant is fulfilling business related activities when launched, that WTC can be claimed. .

Basically, I could register with HMRC tomorrow and cease my claim to JSA and move to NEA. Then I can start advertising for customers.

How long will it take for customers to start ringing me and using my service? It could well be from day one, it could be 2 to 3 weeks before I get a customer. But i'll be out putting posters up in relevant places, doing leaflets drops or calling prospective customers etc. These are things i won't be necessarily getting paid for, as it's all part of making the business profitable. I won't be taking any drawings out till maybe the end of month 2. But does this still mean I can't claim WTC?

Besides, how many self employed people, are making a profit from day 1 to start taking a wage?

BigAunty wrote: »

I'm not really familiar with the NEA scheme - is the £65 instead of or on top of JSA, does it ever run along side it for a period? .

NEA is paid once my claim to JSA ends, or within around a week. So without any WTC or drawings from my business, NEA will be my only income.

BigAunty wrote: »

The NEA scheme says quite clearly that a claimant comes off JSA when the business is launched and started trading and the HMRC website says WTC is claimable after a business has been set up. So when is your business truly launched or is there some kind of staggered or soft launch? .

My business is all set to go, and my launch date was set for the 25th March, till my Jobcentre Adviser, said I wouldn't be eligible for WTC till i'm doing 30 hrs paid work with customers. As part of the NEA course to write my business plan, we were taught, that as soon as we start advertising for customers, we are classed as trading. So therefore I can't start advertising till the 25th March for customers.

BigAunty wrote: »

Perhaps this is something you can revisit and produce a business plan where you actually have sufficient investment and cash flow upfront to overcome precisely the low income scenario until your business is more established? Perhaps you should see it less as a debt and more as an investment that gets paid back many times over? I don't know, I'm just musing.

Unfortunately, I can't now change my mind on the loan, not that I would anyway.

BigAunty

BigAl127 wrote: »

...



My business is all set to go, and my launch date was set for the 25th March, till my Jobcentre Adviser, said I wouldn't be eligible for WTC till i'm doing 30 hrs paid work with customers. As part of the NEA course to write my business plan, we were taught, that as soon as we start advertising for customers, we are classed as trading. So therefore I can't start advertising till the 25th March for customers.

.

Well, you can show your Jobcentre advisor that's he's wrong by printing out the information on the HMRC website that lists the types of business activities that are classed as working time, which doesn't have to be strictly just work billed to the client.

You can also demonstrate that the NEA and WTC rules are complementary, in that NEA insist you sign off when the business is launched and direct marketing commences whereas the HMRC are insistent that time billed in originally setting up the company must be excluded. There is a clear division between the two which means you must sign off NEA when your business actually starts up and can sign on for WTC when you business is launched even if you don't have a client.

Keep good records of your business time - marketing, meetings, quotes, invoices, etc, as the HMRC do target self employed businesses and challenge them on whether they are doing the right amount of hours and that this is spent in renumerative related activity. We see posts on here from small businesses who have lost their compliance investigation and have to pay back their WTC.

Also, look ahead to the Universal Credit system as it has a different emphasis than WTC (tax credits are being scrapped) and expects the self employed to aim for achieving at least the National Minimum Wage from their employment. They are trying to stop the long-term benefit dependency that a large number of the self employed have demonstrated since the inception of tax credits, the govt would rather they wind up their micro businesses or get a regular job on top.

Good luck with your new business.

BigAl127

Thanks BigAunty for the info & good wishes. I'll take the info to my meeting next week and see what my advisor has to say.

Ziggy_Stardust

Hi all :hello:

DH has just started on this NEA, when he was enquiring the job centre were very confused as to how it worked and kept giving conflicting advice. I'm really looking for the T&Cs of this scheme but DH wasn't offered any and I can't find anything online, we're worried that if he's been given incorrect advice they may want him to pay the money back. He's an out of work teacher and after having no joy with the Job Centre decided to start up his own tutoring business. He has a changed the supply agency he is registered with and this one is getting him a few hours in schools per week. What we need to know is how many hours can he work with the agency without it affecting his nea payments? Also if he gets a full time job in a school does he have to pay all his money back?

rosered1963

Ziggy_Stardust wrote: »

Hi all :hello:

DH has just started on this NEA, when he was enquiring the job centre were very confused as to how it worked and kept giving conflicting advice. I'm really looking for the T&Cs of this scheme but DH wasn't offered any and I can't find anything online, we're worried that if he's been given incorrect advice they may want him to pay the money back. He's an out of work teacher and after having no joy with the Job Centre decided to start up his own tutoring business. He has a changed the supply agency he is registered with and this one is getting him a few hours in schools per week. What we need to know is how many hours can he work with the agency without it affecting his nea payments? Also if he gets a full time job in a school does he have to pay all his money back?

I was given no terms and conditions or any information either- just a one-page award notice from Jobcentreplus. What I was told is that after 6 months you are expected to be earning enough from your self-employment to be benefit free. They count that as success.