Tax credits and going from employed to self-employed

InDebted2U_2

I've been working on a short-term fixed contract, which has now come to an end, and receiving WTC and CTC. I don't want to have to sign on but the job situation is not very promising, so I have been thinking again about self-employment. I haven't made any moves towards SE before as I have always thought that the transition into SE would be financially unviable for me. However, if I could continue to receive the same amount of WTC/CTC as I have been whilst in employment then I think I might be able to give it a go. After reading various pages on the HMRC website I don't feel any closer to understanding what I would be entitled to, so I'm hoping someone here can give me some advice.

I've been working full-time and (I believe) receiving the maximum amount of WTC/CTC for someone in my circumstances. Am I right in thinking that I will continue to receive this for another four weeks after my job has ended? Should I manage to secure some work on a self-employed basis what evidence is need for my WTC/CTC claim? How is it determined how many hours a week I am working, bearing in mind that as well as 'employed' hours I will have to spend time seeking employment, doing the books, etc? Is there any kind of assistance/tax help towards the tools I will need for my business? And do I need to register a business in some sort of official capacity for it to count or would keeping things quite informal and taking work here and there where I can get it be okay so long as I keep records? If after four weeks of my 'self-employment' I am not averaging at least 16 hours per week (however this is calculated) of work, then would I cease to be eligible for WTC and have no option but to sign on as unemployed?

Any advice on WTC/CTC and self-employment and/or finishing employed work would be very helpful, thanks.

InDebted2U_2

Any advice please??

poves

FREE BUMP - I'd like some info on this matter too

vintagebrighton

Hi, could you give some other information about your circumstances please? On what basis did you receive tax credits before? Children or low income or some other reason? I can give you a bit of basic info as I'm SE and in receipt of tax credits but I do have a child as well as being a low earner. Based on my own experience which may not be the same as yours;

Basics - you must register as self employed with HMRC when you start as self employed. When I started it was within 3 months but I believe this has now changed. You can check this on their website. This then triggers forms for tax returns, NI contributions etc. If you're going to be on a low income you can apply for NI exemption. HMRC are very helpful about this sort of thing so give them a ring.

You can count, as you say, all your marketing, research, paperwork, networking, travelling in your hours of work for tax credits so estimate on the high side as everything takes longer than you think at first! What about courses to update your skills? Our local unemployed centre does cheap courses on keeping records, computer databases etc. Even though they're cheap they're still tax deductable.

Keep receipts for EVERYTHING. Even that flippin biro you had to buy and keep records - just a simple in and out record will do for now.

When your job ends you have to ring Tax credits to report a change in circumstances. If you're going SE from then HAVE READY the info they'll need so the change will be as seamless as possible. ie Estimate your hours of work and your income - don't worry if the hours are high and the income low - this is usual for newly self employed and you can ring to update when you have a better idea of the reality.

I don't know about any help for starting a business........ I think there is if you've been unemployed for a certain amount of time. Have you been to the small business board on here? Thats always useful.

Last thing, don't forget to update your HB and CTB claims if you have one. HTH

Evie82

I think the post above is pretty accurate and helpful.
I was working 16hrs a week in employment with children on a low income, i stopped this work to set up Self Employed on my own. It was a new venture and I had no idea of income or if it would take off.

I phoned tax credits, told them i estimated it would be 16hrs a week and a estimated income, which was very low, equivalent to 16hrs a week at minimum wage basically.
They were happy with this and my payments of tax credits changed by a few pounds a week.

Housing Benefit was the same, i wrote, told them about the change and sent them my new WFTC letter. They have asked me to send in accounts regularly, so i have basically written down every income (jobs done) and every outgoing cost (fuel, parts, stationary, advertising materials) and the income - deductions is what they class my income as. At present its very low as Im still in early stages so my HB claim has not changed from when I was in 16hrs a wk paid employment.

I registered with HRMC and did the NI exemptions certificate request too. HRMC have sent me a tax reference letter and informed me they will write to me in due course about a tax return.
Its all been very simple actually and I wish I had been brave enough to do it a long time ago.
As others said, for tax credits, estimate your hours slightly over what you think and earnings a bit lower. :beer: