Self employment under Permitted Work Rules

sandrider9

If I start self employment, working from home, 10 hours a week under the Permitted Work rules, how do they assess income? It would be variable; some weeks I may earn less than £20 (the max. allowed) others I would maybe earn more.

Do they average it out or the minute I had a good week would they need to know about it? I cannot find the answer to this anywhere on the net.

If it is averaged out, at what time interval would they do it... over six months, or a year or something?

I am on Incapacity Benefit, long term rate and will be receiving state pension in two year's time.

I know you can go on to earning a higher level per week, for 12 months and then either give up benefit and continue with the self employment or give up the work and remain on benefit. I am not sure when I would go on to that higher level - the first time I exceed £20, (how would they know?) or when they contact me with a request to see an average of my income over a certain period.

Hope someone can help. Anyone been in that position and have first hand knowledge of how they work?

rogerblack

I've been doing research on this - there is !!!!!! all out there.
The most useful sources I've found, are as often in the decision makers guide.
http://www.dwp.gov.uk/docs/dmgch48.pdf - this is ESA guide on income.
http://www.dwp.gov.uk/docs/dmgch50.pdf - this is on self-employed income.

Note that if you're not careful, you can start reading stuff that applies - check that the bit you're reading applies to the claimant, not the claimants partner.

In short, income is averaged over a period of up to 52 weeks, exactly how this period is determined seems to vary on a case-by-case basis.

Income is complex.
It's something like income - allowable expenses, - tax, - some NI, minus half your private pension contributions.
Capital expenditures are not allowed as expenses, but if you rent whatever, it may be.

See the self employed PDF - 50206 - for more details on allowed expenses.

For example, if working at home, a portion of your rent, council tax, insurance, cleaning, heating, lighting, are allowable.

It may be useful if at the end of the period of averaging, if you need to dump some extra profit, to pay it into a personal pension, to keep from hitting the permitted work - lower level - cap.
This only has effect for half you payment though, so is inefficient.

I need to work out more about this.

Another way is to purchase more stock.

Note - increasing the size, or setup costs are _not_ allowed.

I wish there was a nice page on this.
The PWK form and notes are totally unhelpful for someone not doing work at the minimum wage.

sandrider9

Thanks for this - it is certainly hard to understand isn't it! From what I gather, they average it out over 52 weeks then - unless I have misunderstood it.

Maybe I should just start doing it and keep my head down! I have had permission from them to start, but no information whatsoever on how they assess the income.

rogerblack

sandrider9 wrote: »

Thanks for this - it is certainly hard to understand isn't it! From what I gather, they average it out over 52 weeks then - unless I have misunderstood it.

Maybe I should just start doing it and keep my head down! I have had permission from them to start, but no information whatsoever on how they assess the income.

It's regrettably not the case it's a blanket 52 weeks.

It's a year if the business has been trading for more than a year and no likely changes.
See 50069 and subsequent for new businesses.

It seems that the decision makers guide is unclear.
It at several points contradicts itself saying that the period of averaging should increase until it hits one year, as this is likely to give the most accurate result, but the examples all seem to imply that this is not done, and that the averaging is done over multiple shorter periods.

sandrider9

rogerblack wrote: »

It's regrettably not the case it's a blanket 52 weeks.

It's a year if the business has been trading for more than a year and no likely changes.
See 50069 and subsequent for new businesses.

It seems that the decision makers guide is unclear.
It at several points contradicts itself saying that the period of averaging should increase until it hits one year, as this is likely to give the most accurate result, but the examples all seem to imply that this is not done, and that the averaging is done over multiple shorter periods.

It's a veritable minefield isn't it. Two choices - do the work and let them catch up with me, or do the work and report it the first time I exceed the £20 profit per week.

rogerblack

You make 21 pounds/week profit in a week (or an averaged period).
This starts your 52 weeks Permitted work-higher level.
If on the 58th week, you earn 21 pounds, then this is no longer 'permitted work' - it's just work, and it will come off your benefit less the earnings disregard, so your benefit will be reduces by 1 pound.
If on the 105th week, you earn 21 pounds, it's again permitted work higher level, and you can earn up to 95 pounds for another 52 weeks.

This is for people in the work-related group. For those in the support group, or for those who are working with support - supported permitted work - there is no time limit before you can stop earning 95 pounds.

Additionally, the decision makers guide says that permitted work should not normally be taken into account when considering a persons condition.
The above work in the 58th week would not be permitted work, and in principle would be exempt from this normal neglect.

Cpt.Scarlet

It's important to note that only a DWP decision maker can confirm that what you are intending to do comes under the Permitted Work rules, you cannot make this assumption yourself.

rogerblack

Indeed - contact them first!

HappyMJ

rogerblack wrote: »

For example, if working at home, a portion of your rent, council tax, insurance, cleaning, heating, lighting, are allowable.

Be vary careful if you claim rent as a business expense and also attempt to claim housing benefit to pay the same bill. It in most cases won't be allowed. Same with council tax.

sandrider9

rogerblack wrote: »

You make 21 pounds/week profit in a week (or an averaged period).
This starts your 52 weeks Permitted work-higher level.
If on the 58th week, you earn 21 pounds, then this is no longer 'permitted work' - it's just work, and it will come off your benefit less the earnings disregard, so your benefit will be reduces by 1 pound.
If on the 105th week, you earn 21 pounds, it's again permitted work higher level, and you can earn up to 95 pounds for another 52 weeks.

This is for people in the work-related group. For those in the support group, or for those who are working with support - supported permitted work - there is no time limit before you can stop earning 95 pounds.

Additionally, the decision makers guide says that permitted work should not normally be taken into account when considering a persons condition.
The above work in the 58th week would not be permitted work, and in principle would be exempt from this normal neglect.

Thank you for this information. It is whether it is taken as 'not to earn over £20' per week, or over an averaged period that I am not sure about; if it's the latter, then what kind of period are we looking at... even the person I spoke to at the DWP didn't seem to know. In short, I don't know whether to tell them if I end up making more than £20 in a week as soon as that happens - but will probably then make a loss the week after... :-(

sandrider9

thanks also to CaptScarlet and HappyMJ