Self Employment, WTC & JSA Confusion!!

itsnotyouitsme

Hi All,

Sorry if this is in the wrong forum. I seem to have got myself really confused and need some advice.

Basically at the beginning of Sept I lost my job. I started claiming JSA and looking for a job, no luck so far. A few weeks back I decided that as well as looking for a full time job I would start to advertise my services self employed among friends, facebook, etc - I fix Laptops/PC's and other bits and pieces. Anyway I asked the Jobcentre the question of working Self Employed and how it would affect my JSA. I was told that as long as I worked less than 16 hours a week and was available to work I could still sign on. If the money I earnt went over the money I am receiving then I wouldn't get paid for that week - simple! So anyway yesterday I was approached by a friend to fix his laptop, then today I have been approached by another two friends for similar work next week, all Self Employed. Obviously next week when I have to sign on again I will explain that I've worked x hours and earnt y money - again sounds simple. Thats when I decided just to check things out on the web to find out if people have ever had problems and now I've found myself reading up on Working Tax Credits whilst Self Employed instead of JSA......this is what has got me confused.

I'm not expecting my business to take off like it has the last couple of days, so is it worth me investigating the WTC route? Apparently you have to work over 30 hours to claim WTC, which I'm currently not. Could the work I spend advertising, etc go towards the 30 hours?

With this amount of interest from a few friends I'm thinking of increasing the scope and seeing if I can get any non friend customers and to be honest would love this to flourish into a proper business.

I haven't registered as Self Employed yet as I have yet to actually receive any money. If I register for Self Assessment will that screw up my JSA?

As you can see I'm totally confused.

steve1980

I assume you have registered with HMRC as a sole trader? If not then do it now -> http://www.hmrc.gov.uk/selfemployed/register-selfemp.htm

You can also register for low income so you don't need to pay NI -> http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?formid=433&record=yKpjabZqCc8

Are you single? Have kids? Living with someone else?

itsnotyouitsme

I haven't registered with HMRC yet, but will get on it asap!

With regards to the low income bit, I earnt over £5,315 in the 2011-12 year when I was employed......does that matter? or does it start from the moment I become self employed? If in December things are really picking up and I expect my earnings to go over the threshold, will I have to pay back dated NI or will it start from the moment that I declare that I expect to earn over that amount?

I live with my wife and 2 kids. My wife is employed full time. We currently rent - I have approached my landlord with regards to working from home and he has no problem with this.

Horace

If you have set up as a self employed computer repairer then you would need to notify the HMRC that you are self employed. You would then be responsible for paying tax on your profits, paying your own NI, you need business insurance certainly public liability and professional indemnity. You would need to work 30+ hours a week - and for that 30+hrs that would include any marketing that you do. Working Tax credit will be approx £51.85 per week if you are over 25 and you could apply for a Class 2 NI Exemption. If you fail to register your self employment with the HMRC then they will fine you. Are you charging people for the work that you do or are you just doing them a favour as a freebie? If it is just a freebie then there is no need to register as self employed.

I am currently claiming JSA even though I am still self employed. I am allowed to work for 15.59hrs a week and must declare any earnings to the jobcentre this will affect the money I receive and would only be allowed to earn £5 for it not to affect my JSA payments. I have had to advise the HMRC that I am now working less than 30hrs a week and they have let me have a run on of my WTC for 4 weeks, if the work situation improves and I am back working more than 30hrs a week, I can re-apply for WTC.

I hope this makes sense.

itsnotyouitsme

It does make sense, thank you for your help.

I haven't taken any money from anyone as yet, but did start 'working' on a laptop today - the first one which I will be paid for once the work is complete.

Are you claiming WTC and JSA or JSA whilst work is bad and then WTC when it is good again?

Horace

itsnotyouitsme wrote: »

It does make sense, thank you for your help.

I haven't taken any money from anyone as yet, but did start 'working' on a laptop today - the first one which I will be paid for once the work is complete.

Are you claiming WTC and JSA or JSA whilst work is bad and then WTC when it is good again?

I am only claiming JSA at the moment, if/when work improves then I will be able to ditch the JSA and re-apply for WTC. I am not allowed to claim both at once.

When you register with the HMRC as a sole trader they will ask for your start date, (don't say you started last month), even though you will have been trading for a short time you will be sent a self assessment tax return to complete - you will be taxed on your profits and if you make a loss you may (not saying you will) get a tax rebate. The HMRC also run free courses on how to complete your self assessment (thankfully my accountant does mine).

itsnotyouitsme

Horace wrote: »

I am only claiming JSA at the moment, if/when work improves then I will be able to ditch the JSA and re-apply for WTC. I am not allowed to claim both at once.

When you register with the HMRC as a sole trader they will ask for your start date, (don't say you started last month), even though you will have been trading for a short time you will be sent a self assessment tax return to complete - you will be taxed on your profits and if you make a loss you may (not saying you will) get a tax rebate. The HMRC also run free courses on how to complete your self assessment (thankfully my accountant does mine).

Thanks for your help. When claiming WTC does it matter that you've previously been employed fulltime? Is there a earnings threshold?

Horace

I cannot remember to be honest. I started my business off the dole and had been unemployed from Aug 2007 until April 2009.

You have to be on low income to get WTC that much I do know but what level they consider low then I have no idea.

podperson

When you apply for WTC they will ask for your income for the previous tax year, however if you are currently on a significantly lower income now you can ask for it to be assessed on that instead.
I'm a little confused though that you say you live with your wife so is she not claiming on a joint claim for both of you? That's what me and OH were told we had to do, although I'm on the only one with an income at the moment as he's a student. Also I assume that you're on contributions based JSA so worth looking at the tax credits side more as will only be able to claim that for 6 months anyway.

itsnotyouitsme

Hi podperson,

My wife and I currently claim Child Tax Credits. Last year my income fluctuated as I moved jobs 3 times spending some time of it on JSA, etc. My wifes income went up to compensate by doing overtime. When we renewed in July this year they had worked out that we'd overpaid, even though we told them about all the changes that had been going on :mad: whilst they'd been going on. When we got our award through they said we'd already been paid our years worth and therefore no payments were due. At the time that was ok as I was in fulltime employment. When I became unemployed again I told them I was on JSA and no longer employed. They said that we still earnt too much so far and no payments were due, even when almost exactly a year ago we had the same thing happen and our payments shot up by £100 per month! The lady explained that due to changes in April this was now the case.

With regards to WTC, I don't think we've ever been eligible as we've not had a low income until now. I've typed out details into the entitledto website so many times trying to get a different answer and everytime it comes back that we are not entitled to WTC.....I believe this is down to the money I've already earnt this year whilst in full time employment - totals £7500 before Tax plus my wifes £23k annual salary.

This is why I have so many questions with regards to WTC. The thing that annoys me is that I am doing lots of advertising trying to get work in for me, however I'm also having to spend a lot of time applying for work due to my JSA obligations. I want to move to WTC if it was guaranteed that we'd get something, so I can put more time into getting self employed business. I so badly want this business to work.