How do you show self employed income to housing benefit?

BigAunty

As indicated, the changes to self-employment and benefits under UC are a long way off, if implemented at all. At most, you should see this as a risk to the business and make a note of it in your business plan, and monitor the UC proposals.

At the moment, anyone can set up a 'business' with low or no profits, in order to better qualify for tax credits, just that it looks like the govt plans to make it much harder to run hobby and pin money type businesses where there is no hope of the person even making minimum wage from it. Looks like they intend that the risk goes back on the business person, which is what happened before the introduction of tax credits, instead of the taxpayer.

Charityworker

krisskross wrote: »

why can't your husband look after your child so you don't have to take a day off?

He was at a job interview. Thanks very much.

I must say I really find you all unbelievable. I started a thread asking whether simple writing in a cash book is ok for a small business. You turn it into a benefit bashing thread. I'm only trying to help myself to get work because employed work has not been very forthcoming but I get accused of sponging the system!

You act as if I started a thread saying "I'm going to work on the side and not declare anything".

As far as the minimum wage from self employment goes I dont think that will be a problem. I've been doing temporary tattoos at fetes since the summer to help raise money for the charity I work for and they average out at about 15 per hour at £2.50 each. I buy supplies for 90 tattoos at a time for £22. Now I will be doing it more regularly I'll order more at a time. I'll also be selling badges and things alongside that on my stall.

maidincornwall

If your doing it as your own business I think you will need some kind of public liability insurance, I expect the charity you did it for already has this, It is a business expense that can be claimed against any profit made MIC

cit_k

Charityworker wrote: »

Oh well if that proposal comes forward I'm afraid I can't keep my head above water. I've done everything I can to help myself and my family during these benefit cuts. If they are bringing in all these rules I'm afraid I can't compete. A life of poverty awaits me and my poor children.

And to top it off I have got to have the day off tomorrow so I can look after my child who should be at school but isn't because of the strikes. And I don't even get a pension. Thanks very much.

Which would be the ideal outlook for the government, they are doing everything they can to get as many people dependant on benefits, and into workfare as possible.

dont be fooled that UC is to help people into work...

tatonette

turkleton wrote: »

The amount of people who work 50 hour weeks but make no money in my area is insane but as self employed income cannot be proven nothing can be done.

Yes it can and is being done right now. I have a friend that works in Preston at the TC office, and all suspected self employed earners are being targeted.

They used to single them out for trying to prove that they were at it.

Now they are just cancelling the claim on the basis that they believe that they work for no more then 29 hours a week and 15 hours a week for the disabled.

If you want to appeal, then it is for the individual to prove that they actually do work for over 30 hours a week.

Doing it this way pushes the onus onto the claimant to submit the proof, and not, as it used to be, for HMRC to prove that they were not working the required hours.

Quite a clever trick in my opinion.

I have already seen a few threads recently on here that this is happening.

dktreesea

With self employment, the housing benefits offices usually ask for accounts every three months. This can be impractical if you have annual expenses for some things and don't want to make accruals.

The main thing is to register with HMRC as self employed, telling them what date your business starts from. Strictly speaking, this is the date you register as self employed. It's okay to be self employed and work for someone else as well, in case you were wondering. Once you have registered, then you need to let HMRC know the change to your expected income for the year, via the tax credits helpline (0845 300 3900, but if you don't have free 0845 calls option on your phone (yaay for Virgin Media, £2 a month and it's been great, I didn't even know they offered this. Once I was ringing them about the broadband and this guy on the other end asked me if I knew about it and signed me up), I would advise checking saynoto0870.com website to get their geographic number.

With self employment income, it is the net income you need to advise the HMRC (i.e. revenues - expenses), NOT the gross income (i.e. just revenue).

Deeming rules. I know this isn't in place yet, but my understanding of how this will work is, for benefits purposes, NOT income tax purposes, if you work over 30 hours a week in the business, then the deemed net income is 30 hours a week @ the NMW. If you work 24 hours (going to be the minimum hours to qualify for working tax credit, up from 16 hours) then the deemed net income is 24 hours @ the NMW. The point about the 30 hours a week being different from 24 hours a week is that people who declare their hours to be over 30 hours a week get extra working tax credits.

If you already work 16 hours, and only 8 hours at your self employed work, then as I understand it, either the income is deemed to be the NMW across the 24 hours, (so if you earned £7 an hour at your 16 hours a week job, it would only be increased, for benefits calculation purposes, up to whatever 24 hours at the NMW would be. OR it will be worked out at your actual income for the 16 hours plus 8 hours at the NMW.

Format of accounts. A simple profit and loss account should do. You don't need to supply the housing benefits office with a balance sheet. So something along the lines of:

Jo Smith trading as XYZ tattoos
Profit and Loss Account
Period 1st December 2011 to 28th February 2012

Sales £2,380
Less Cost of Sales:
Tattoos 350
Other 75
Stall fees 220
Mileage 400
£1,045
Profit £1,335

(For mileage you can claim 40p per mile to the various places you go to set up your stall or where you go to get supplies. Make sure you keep a log book)

It's good to have a separate bank account for all this. And to bank you gross revenue religiously into it. Pay for supplies by card, so it's easier to keep track of on the bank statement. They do sometimes ask for bank statements, for proof of revenue. Hence keeping it separate. For expenses make sure you keep all receipts. Get a receipt even if you are not sure it is claimable.

So if this were your only income, with the deeming rules, you would need to work 24 hours a week at the business to qualify for working tax credit. So even though this only works out to around £100 a week in the above example, you would be deemed to have earned £6.08 * 24 hours *13 weeks = £1,897. This is ONLY for calculating the rate of tax credits/housing benefit etc that you could receive. From an income tax point of view, you would just declare the real net profit/loss when you do your tax return.

At this moment though, the deeming rules are not only not in place for self employed people, they are being vigorously lobbied against. Given the main age group that are self employed, which just so happens to coincide with the main voting age bloc, it will be interesting to see if Cam and Co have the b*lls to go ahead with their plans.

dktreesea

tatonette wrote: »

Yes it can and is being done right now. I have a friend that works in Preston at the TC office, and all suspected self employed earners are being targeted.

They used to single them out for trying to prove that they were at it.

Now they are just cancelling the claim on the basis that they believe that they work for no more then 29 hours a week and 15 hours a week for the disabled.

If you want to appeal, then it is for the individual to prove that they actually do work for over 30 hours a week.

Doing it this way pushes the onus onto the claimant to submit the proof, and not, as it used to be, for HMRC to prove that they were not working the required hours.

Quite a clever trick in my opinion.

I have already seen a few threads recently on here that this is happening.

At the moment, to qualify for WTC and housing benefit, you only need to work 16 hours a week, not 30, and even then that's per household, not per person. Even for 30 hours a week, assuming they claim the extra £1500 a year or so WTC for working the longer hours, surely they would have no problem at all proving they work the hours?

For example, say you run a stall at Bury market for 2 days a week. Every hour counts. Packing the van or car, waiting in a queue to get your stall assigned, being at the market for the 7 hours or so, driving back to base, unpacking the car again. That's a 10 hour day right there, 20 hours a week, and you haven't even gone to buy stock for the stall, let alone done your accounts. You'ld probably need to go to one or two auctions during the week, to stock up and be able to rotate the stock so regulars see different things each week.

uganda

dktreesea wrote: »

Format of accounts. A simple profit and loss account should do. You don't need to supply the housing benefits office with a balance sheet. So something along the lines of:

Jo Smith trading as XYZ tattoos
Profit and Loss Account
Period 1st December 2011 to 28th February 2012

Sales £2,380
Less Cost of Sales:
Tattoos 350
Other 75
Stall fees 220
Mileage 400
£1,045
Profit £1,335

This is more or less the model answer to the actual question that the OP asked. Well done.

OP, there are a lot of people who are incapable of answering a simple and direct question simply and directly. Ignore them.

PS. They may ask for a sample of receipts and invoices to show incomings and outgoings. And they assess based on your net profit (then normally subtract notional tax and national insurance figures from that, the 'net' in 'net profit' meaning net of expenses, not of taxes).

actonbell

I recommend contacting Business Link - I think they can give you advice on how to do your profit and loss forecast and your accounts. This is what the housing benefit will want to see (as someone said earlier, they only look at it every few months and work out an average).
Good luck, sounds great!