Tax credits and income tax

rafhelp

If you decide to become self employed , you ring, IR and tell them you are a sole trader and give them your trading name.

You start your business. Say in the first few months due to the nature of the business and expenses you make like £200 profit per month.

Would you be eligible to claim income support and tax credits on top of ANY profit you make. Based on the fact that you are working full time in the business.

I then assume if you can claim income support then you can also claim housing benefit?

Thanks.

want-it-all

Income Support? No.

You can only claim Income Support if you work less than 16 hours per week, subject to earnings limits (I am not sure what the limit is, but do know it is very low), and are ‘excused’ from work on some grounds, such as being a lone parent of very young children, or being a carer, etc.

Working Tax Credits, on the other hand, can only be claimed if you work over 16 hours per week and are responsible for a child for whom you still receive Child Benefit, or you are classified as disabled, or you are aged 50+ and returning to work in certain circumstances.

If you don’t have children under the age of 20, aren’t disabled, and aren’t aged over 50, you need to work 30 hours per week (and be aged over 25) in order to claim WTC.

So, it would appear as though you can’t claim I.S. and WTC at the same time under these circumstances (if that’s what you’re getting at). Child Tax Credits alone are a different animal, though, yet if you are working more than 16 hours per week, I.S. is a no-no, regardless of earnings.

It’s one or the other (watch your working hours and your income if it’s Income Support).

However, a valid claim for full or partial Housing Benefit may still be available – it’s not limited to Income Support claimants only.

rafhelp

So 30 hours full time self employment and over 25 means you can claim WTC. Then that increases chances of HB

want-it-all

rafhelp wrote: »

So 30 hours full time self employment and over 25 means you can claim WTC. Then that increases chances of HB

Yes, you could claim WTC on the above basis, but it's still subject to income limits and means testing. You could get something, you could get nothing. Just being self employed (or in any kind of work) does not automatically give rise to an entitlement to WTC.

So long as you're accurate and truthful with your figures at all times, it never hurts to submit a claim for WTC. I once claimed and was awarded the grand amount of £48.00 for the whole financial year. I was single, over 25, and had earned something like £13k during the previous tax year.

The fact that you claim WTC has nothing to do with success/non-success of a HB claim. HB is means tested, and other factors that need to be taken into account is who else is living with you (or not), their own income situation (or lack thereof), etc.

It's impossible for anybody to say whether you'd qualify for WTC and/or HB, and at what rates, without knowing your full financial, work and household details.

Do a google search for "Directgov benefits adviser" and select the top result (sorry, I can't post direct links yet, as I'm new).