Tax credits for self employed

ragdoll1924

I have been getting working and child tax credits as I worked at a school. Unfortunately my job has come to an end and I had a opportunity of opening up a shop in my local town.

Due to all the overheads I am going to have with set up costs etc and after a meeting with my accountant it is very unlikely I will actually make any money for the first few months, how can I tell tax credits that I will be working for nothing for first few months until I can assess how much the shop ends up making (if it does) and will they accept that I am self employed but earning no money??

Obviously after a few months I maybe able to make a better judged assessment on how much I am able to take for a salary, but until then I am going to have to work of the figures that for the time being I am not going to be able to draw a salary for myself until the shop has been up and running for a few months and to see if the shop makes enough money to firstly cover the outgoings then to see if there is profit for me to draw a salary.

If anyone has any experience of this I would be very grateful for your advise.

pauletruth

its not a problem as long as you are working the minimum hours you will get it. i made a loss the last two years and still get it.

HappyMJ

ragdoll1924 wrote: »

I have been getting working and child tax credits as I worked at a school. Unfortunately my job has come to an end and I had a opportunity of opening up a shop in my local town.

Due to all the overheads I am going to have with set up costs etc and after a meeting with my accountant it is very unlikely I will actually make any money for the first few months, how can I tell tax credits that I will be working for nothing for first few months until I can assess how much the shop ends up making (if it does) and will they accept that I am self employed but earning no money??

Obviously after a few months I maybe able to make a better judged assessment on how much I am able to take for a salary, but until then I am going to have to work of the figures that for the time being I am not going to be able to draw a salary for myself until the shop has been up and running for a few months and to see if the shop makes enough money to firstly cover the outgoings then to see if there is profit for me to draw a salary.

If anyone has any experience of this I would be very grateful for your advise.

What's working in a school got to do with tax credits? I worked in school once and I didn't get them.

You make an estimate of what you think you will make in this financial year. It's not paid on what you make monthly or weekly it's only paid on the whole tax year. The tax credits you will get now will be based on last years earnings and the tax credits you get from April will be based on your estimate for this year. If you estimate too low you will get too much tax credits and if you estimate too high you will get a lump sum when you provide the actual figures for the year later next year.

If you think you will make nothing then estimate nothing for now and if it changes dramatically then call them up to change the estimate.

ragdoll1924

Thank you all for your kind replies.
Happymj - I didnt mean working at a school gets special tax credit treatment I was just trying to say that I have been getting tax credits, I get tax credits as my swine of a husband left me and my 3 young children, but I chose to work so get topped up with working and child tax credits which I am extremely grateful for as it means I can just about make ends meet on a very tight and frugal budget. I was just scared that because I will no longer get the salary I got from the school and estimate not taking a salary from the shop for a while that they would not support me or take my earnings as the same as the school to which would mean that I would be worst off each month and would not be able to meet my basic living needs.

HappyMJ

ragdoll1924 wrote: »

Thank you all for your kind replies.
Happymj - I didnt mean working at a school gets special tax credit treatment I was just trying to say that I have been getting tax credits, I get tax credits as my swine of a husband left me and my 3 young children, but I chose to work so get topped up with working and child tax credits which I am extremely grateful for as it means I can just about make ends meet on a very tight and frugal budget. I was just scared that because I will no longer get the salary I got from the school and estimate not taking a salary from the shop for a while that they would not support me or take my earnings as the same as the school to which would mean that I would be worst off each month and would not be able to meet my basic living needs.

They only know what you tell them so if you tell them you earn zero then they must take that figure. They do not say "we don't believe you". You will be worse off I think you know that but your basic living needs will be met. Extras such as mortgage and loan repayments and other luxuries such as sky or mobile phone contracts will not be paid for you.

Hammyman

ragdoll1924 wrote: »

how can I tell tax credits that I will be working for nothing for first few months until I can assess how much the shop ends up making (if it does) and will they accept that I am self employed but earning no money??

Yes they will accept it. In Year 1 I made a loss on paper, in Year 2 that turned to about £250 profit. This year is going to be considerably more profit now. Most businesses aren't expected to make a profit in Year 1 due to start up costs and low initial trading levels and in some cases, even make nothing in Year 2 if you make sufficient a loss on paper in Year 1 and offset that loss against future income (see a tax accountant).