Working Tax Credit Stopped

scorpio13

I received an update letter from HMRC regarding a recent Tax Credits enquiry (the letter they send to ask for Business info, breakdown of hours worked etc.)
They are now saying i am not entitled to any Tax Credits, as i don't do Renumrative work and i owe them over £2,500!
I will obviously be appealing this decision [which the HMRC adviser told me to do], but while i'm appealing what am i supposed to do (money-wise) in the meantime?
Also, my Housing & Council Tax Benefits will obviously be affected. Do i contact those relevant Depts. now or after the appeal?

CIS

The general rules on renumerative work are here - http://www.hmrc.gov.uk/manuals/tctmanual/TCTM02400.htm

nannytone_2

contact them now. as hb/ctc are about household income, and yours seems to have dropped significantly.

as for the 'renumerative' work issue ... how many hours a week are you leafleting/door knocking as opposed to actually providing the service that makes you money?

surely a business is only viable if the 'marketing you do brings in trade?

the rules will be changing soon with regards to self employment and tax credits.
it will be assumed that you are receiving NMW for the hours that you work, and tax credits will merely top this up.
no one will be allowed to be self employed while haveing the majority of their income from tax credits.

DaisyChainMaker

what is nmw?

Aesop

DaisyChainMaker wrote: »

what is nmw?

national minimum wage

BigAunty

I got the impression that there has been some kind of significant compliance review of self employed tax credits claimants this year where the HMRC are asking people to provide supporting evidence of their business.

The changes that Nannytone mention are to do with the proposed Universal Credit system which is supposed to replace a huge number of individual benefits. The proposal paper (note it's not yet a policy, more of a draft) has indicated that the hours thresholds that belong to tax credits will disappear as they are not conducive to employers needs. For the self-employed, there is an emphasis on them building self-supporting businesses and so there is an expectation that they can make a living from them, and the self employed will be treated for means tested benefits as if they are earning the national minimum wage from their businesses.

So keep your eye on the Universal Credit implementation. This is the actual specific wording from the proposal paper "“Some self-employed people under Tax Credits report very low levels of income. We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported.”"

How many hours do you work week and what is your annual turnover and profit?

Sixer

nannytone wrote: »

the rules will be changing soon with regards to self employment and tax credits.
it will be assumed that you are receiving NMW for the hours that you work, and tax credits will merely top this up.
no one will be allowed to be self employed while haveing the majority of their income from tax credits.

This is misleading. The proposals aren't to assume income and pay Universal Credit on the basis of that assumption. The proposals are to set a threshold (based on full-time NMW or part-time for some parents depending on the age of their children) and if you earn below the threshold, you'll be expected to prove you're looking for more work as JSA claimants have to now. But provided you prove you are looking, your UC will still be based on your actual income.

Sixer

BigAunty wrote: »

the self employed will be treated for means tested benefits as if they are earning the national minimum wage from their businesses.

As above. This isn't the proposal. The proposal is to make people earning less than the equivalent of a full-time NMW job LOOK FOR MORE WORK UNDER THE SUPERVISION OF THE DWP. Claimants will still receive UC based on their actual income.

HappyMJ

Sixer wrote: »

As above. This isn't the proposal. The proposal is to make people earning less than the equivalent of a full-time NMW job LOOK FOR MORE WORK UNDER THE SUPERVISION OF THE DWP. Claimants will still receive UC based on their actual income.

Is that all...oh well that's OK then. I currently work 30 hours a week have 12 weeks annual leave and earn a profit averaging £37.50 per week. I'm always looking for more work so if all they want is just to see proof of that then I don't mind.

GlasweJen

I would imagine that HMRC expect you to have annual leave of the statutory amount and not more than twice it!

BigAunty

Sixer wrote: »

The proposal is to make people earning less than the equivalent of a full-time NMW job LOOK FOR MORE WORK UNDER THE SUPERVISION OF THE DWP. Claimants will still receive UC based on their actual income.

The proposal paper says 'we are considering introducing a floor of assumed income from self-employment'.

Certainly, pressure groups have also interpreted it the paper to that a notional income using the NMW will form part of the remaining means tested benefits, whether or not this income is achieved.

http://www.family-action.org.uk/section.aspx?id=13397

http://www.farmersguardian.com/home/business/business-features/self-employed-to-lose-out-on-universal-credit/38266.article

http://news.uk.msn.com/politics/articles.aspx?cp-documentid=159933489

Note this exchange by ministers

"Mr Timms said: "The Low Incomes Tax Reform Group has said tax credits today support self employment much better than the proposals for universal credit will in the future. This is because universal credit will assume people are earning at least the minimum wage which is completely unrealistic in the early years of self employment.
"Will you look again at this particular problem with universal credit, at least for the first year or two of somebody's self employment?"

Employment Minister Chris Grayling said: "We will be monitoring very carefully how decisions we take around universal credit work. But as you know, whilst we want to support and encourage self employment at the same time we cannot allow people to shelter themselves on benefits under a false excuse of being self employed."