ESA/permitted work / self employment

rogerblack

I'm wanting to start a business in a very small way, as my health and time allows.
The profit from this, and the hours worked would be within the permitted limits.

However, I'm unsure of how it works with self-employment. Due to the nature of the business (manufacturing small technological items for sale on ebay), I might have 600 income one month, on costs of 400, and nothing for the next couple of months, as I'm making stock for sale.

So, an average of 20/week.

Is it permitted to do this averaging? Clearly - I'd have to have a separate bank account, which isn't an issue.

Nor is my overall capital limit.

I can't seem to find any nice how-to for how self employed permitted work works, any know of one?
Thanks.

MrsManda

There are ways of averaging the amount earned over time to take into account flutuating income but I don't know how you go about organising it with the DWP.

The DM guide chapter 48 from section 48079 details different ways the DWP can average earnings while claiming ESA. I think you need to speak to your advisor and work out what you need to do before starting your business - try to get everything confirmed in writing.

http://www.dwp.gov.uk/docs/dmgch48.pdf

Cpt.Scarlet

Only a DWP decision maker can decide that what you are doing counts as Permitted Work, so you need to contact your local office before proceeding.

rogerblack

MrsManda wrote: »

I think you need to speak to your advisor

I'm unsure I have an advisor (edit) ah - I see one is appointed if you tell them you want to do permitted work.

I was hoping to avoid plowing through the DMG.
Much of the treatment of SE in the DMG seems to be from the point of view of someone who is healthily self employed and needs to claim ESA, rather than starting a microbuisness when on ESA.

And yes - confirming in writing is of course a required step.

I suppose phoning them to see if they have any leaflets wouldn't be a bad plan.

back2work

I have been on Incapacity Benefit, now ESA for 10 years with M.E. and also under the lower rate permitted work ie £20 weekly and doing my tax a/cs. I was advised my Pathways, who help people get back into work that you can average out for this lower rate. I am now wanting to go into the higher rate bracket ie £97.50 weekly. If all my expenditure went against my earning I have calculated that I would earn nothing at all in the first year!....breaking even instead of working at a loss as I have done. My ESA adviser believes that you can claim some things but not everything....we are still trying to find out exactly what! I'll keep you posted...But if anyone can help...?
On another tack; re Tax, if you have been self employed you can put the last 6 years losses against any earnings. So you may not be able to claim everything for the Pernitted Rate Higher Level work but you can for your Tax.a/cs.

Notmyrealname

You will be required to periodically submit your accounts. Your eligibility will then be calculated on that periods accounts.

If all my expenditure went against my earning I have calculated that I would earn nothing at all in the first year!....breaking even instead of working at a loss as I have done. My ESA adviser believes that you can claim some things but not everything....we are still trying to find out exactly what!

Your ESA advisor is correct in one way but basically every expense to do with the business is claimable however where there is shared use between private and business, such as internet or using a room in your house which is used for private use as well, you can only claim the percentage which is business use. In the example of a shared use room you can only claim a flat rate of £150 a year and you cannot claim for gas or electricity. If the room was solely used for the business then you can claim the percentage of mortgage interest/rent that room forms of the house and the same with the gas/electricity.

It is quite possible for new businesses to make nothing in the first two years due to startup expenses resulting in a loss in the first year which can be then offset against a profit in the second year.