Tax credits + extra variable income = confused :-S

muddyl

Hope this is the right place for this.
My wife works part time and I work full time on not much over minimum wage.
We receive tax credits and a small reduction in council tax.
Our family get by financially but only just.
I'm thinking of taking on some extra work, but not sure how this would affect things as some months I may earn no extra, others (hopefully) a few hundred with the hope that over time it can take over my full time job (as it has no prospects for promotion or significant wage increases).
I have the option of doing this as a second job, or on a self employed basis.
I dont want to have the outlay for a few tools if im going to be no better of(i.e. Any extra I earn being balanced by deduction from tax credits leaving me no better off).
Nor do I know how to deal with the tax credits on a self employed basis or as a second job with variable income.
Can anyone in the know shed some lights on this or point me in the right direction please?
Rather confused and any help greatly appreciated.

muddyl

Nearly 100 views and not a single comment, i'm quite surprised.

Vejovis

AFAIA tax credits go off the previous years income. so you'll have your accounts in place when you come to renew.

Oneday77

I think you need to look at this in a different way.
If I understand correctly you want to improve your family income and give yourselves better prospects. At he same time you don't want to o more work for the same money as you'll likely lose Tax Credits.

Think of your outlay on tools and better prospects as doing a degree. The extra hard work is an investment for your families future. So don't view the no better off as fact, you will be.

zagfles

Tax credits reduce at 41% max of any increased income, not 100%, so you will always be better off with a permanent increase in income. First year there'll likely be no reduction in tax credits anyway as there's a £10k disregard for income increases.