self employed hours WTC

nicky7

I am self employed, I run two small businesses. I earn roughly £7 an hour when I am working for the customers but my hours are sporadic as is my income it fluctuates.

I was just wondering I have calculated that I do work roughly 30 hours a week ( cleaning my work vehicle, printing out and putting together customer orders, driving to customers houses etc) but not all of this is paid only 16 hours is paid, does this count towards my hour requirement for WTC as it's not paid work, but work essential for my business.

btw I would have to work 30 hours of more to qualify as I have no dependant children.

Thanks?

BigAunty

Yes, 30 hours to qualify for WTC if you have no dependents or disabilities. Also, check the Turn2us online benefit calculator to see if you qualify for any housing benefit (if a tenant) or council tax discount.

If you do claim WTC, ensure you keep a very good record of how you spend your time with ample proof, such as appointments, quotes, etc. This is because the HMRC have detected that some self employed abuse the system by exaggerating their hours and they undertake regular compliance reviews. Also, do read the HMRC website on self employment and WTC to understand that you are fully complying with what they class as renumerative work.

It's not just the direct time spent with customers but time spent on the business for your clients - from the HMRC website:-

If you're self-employed
Put down the number of hours you normally spend working in your business, either on work billed to the client or related activity, for example:

• trips to wholesalers and retailers
• visits to potential clients
• time spent on advertising
• cleaning the business premises
• cleaning a vehicle used as part of the business, for example a taxi
• book-keeping
• research work

If you work from home, include time spent travelling to see customers.

http://www.hmrc.gov.uk/taxcredits/start/claiming/income-hours/work-out-hours.htm

pickpocketlocket

Good luck trying to convince HMRC that you work thirty hours but only receive payment for sixteen - that's an awful lot of unpaid hours. They are really cracking down on those that might exaggerate their hours, so be ready to provide them with a full breakdown of what you do with your time.

Pedent

Also, be aware that you'll be affected when you're migrated to Universal Credit.

Based on what you've said, you currently earn £3.73/hour (30 hours worked, of which 16 are billable at £7/hour, totalling £112/week).

Under Universal Credit, self-employed claimants will be treated as earning a minimum amount (expected to be 35 hours at minimum wage, which is currently £6.08, totalling £212.80/week), even if their earnings are in fact lower.

You'll also have to attend interviews and provide monthly accounts to demonstrate that you're actually doing the work that you say you are.

At least you have a couple of years to plan for the changes.

dktreesea

Well, you may have to attend interviews under UC. I doubt if DWP have the manpower to properly police this. Plus UC isn't coming in until October 2013, so plenty of time to build up your client base, I would have thought.

It will be interesting to see how many self employed people, come October 2013 (I note that the transitional arrangements to protect the benefits of those who would be worse off under UC won't apply to the self employed) decide to wind up their business and go on the dole instead.

Pedent

dktreesea wrote: »

(I note that the transitional arrangements to protect the benefits of those who would be worse off under UC won't apply to the self employed)

As I understand it, self-employed claimants will receive the same transitional protection as everyone else, except that they won't be protected against reductions in their awards due to the introduction of the Minimum Income Floor.

Am I wrong?

dktreesea

Pedent wrote: »

As I understand it, self-employed claimants will receive the same transitional protection as everyone else, except that they won't be protected against reductions in their awards due to the introduction of the Minimum Income Floor.

Am I wrong?

This seems to be a "shifting sands" situation. on the 4th of July the DWP stated:

"Transitional Protection will also not be offered to self-employed claimants against the effects of the Minimum Income Floor. In these cases, the Transitional Protection calculation will be carried out prior to the Minimum Income Floor being applied. Once the Minimum Income Floor is applied the household will retain their Transitional Protection amount, but no further protection will be provided. This will ensure that claimants’ circumstances other than those related to earnings are protected. "

This supports what you suggest.

The idea seems to be that you can't end up worse off under Universal Credit. So say a self employed household currently gets £400 a week, but, if the minimum income floor was applied, they would only get £200 a week. This DWP statement suggests that their UC would be calculated ignoring the minimum income floor, - say this comes out to £400 a week - but that this amount would not rise with cost of living increases, say, over time, or if new children were born into the household etc unless the situation arose where the entitlement with the minimum income floor applied is more than the protected £400 a week.

It's not really clear what would happen if the flip side of event occurred, e.g. someone leaving the household, e.g. a child turning 18 and moving away to study.

The same document from the DWP goes on to state:

"Therefore Transitional Protection will end altogether if a claimant’s circumstances change significantly. The following occurrences are defined as a significant change in circumstance.

1. A partner leaving/joining the household
2. A sustained (3 month) earnings drop beneath the level of work that is expected of them according to their claimant commitment
3. A sustained (3 month) increase in earnings which would lift the claimant out of Universal Credit means-tested support
4. The Universal Credit claim ending
5. The loss or gain of any of the elements that make up the Universal Credit award (for example, the childcare element, the housing element etc)"

I am not quite sure what a "claimant commitment" for the self employed will be. Most self employed people in retail, for instance, make the lions share of their income over Christmas. But the profits are then meant to see them through the rest of the year. Will they lose their transition protection because of the increase in income over the Christmas quarter? If a child turns 18 and falls out of the child benefit/child tax credit regime, will this cancel transitional protection as per item 5?

I take all this to mean that for the newly self employed, the minimum income floor will be applied from the beginning off the claim, but for the existing self employed they will do everything they can to get people off that protection quick smart. The sustained three months earnings change could do that fairly quickly.

aliwali

Sorry to hijack thread. I must be living in a cupboard because I haven't even heard of Universal Credit! Does this mean then that as a childminder earning £3 an hour, I would earn for a 30 hour week say £90 per week, but under UC I would be assumed to be earning £212.80? If that is indeed correct how is that either fair or accurate.

Cue winding up my business if that is going to be the case.

sniggings

aliwali wrote: »

Sorry to hijack thread. I must be living in a cupboard because I haven't even heard of Universal Credit! Does this mean then that as a childminder earning £3 an hour, I would earn for a 30 hour week say £90 per week, but under UC I would be assumed to be earning £212.80? If that is indeed correct how is that either fair or accurate.

Cue winding up my business if that is going to be the case.

if you charged the minimum hourly rate of £6.08 say for 15 hours and said the other 15 were not earning hours but used for traveling etc then you would have a point but charging less than the min wage an hour you can't expect the government to support your business just because you have choosen to charge £3.

That would be like McDonalds paying their staff £3 an hour and expecting the tax payer to make up the difference.

pickpocketlocket

aliwali wrote: »

Sorry to hijack thread. I must be living in a cupboard because I haven't even heard of Universal Credit! Does this mean then that as a childminder earning £3 an hour, I would earn for a 30 hour week say £90 per week, but under UC I would be assumed to be earning £212.80? If that is indeed correct how is that either fair or accurate.

Cue winding up my business if that is going to be the case.

They would expect you to care for more than one child at a time to increase your income.

Charityworker

Yes, I have a small business and I calculate my hours as all the hours I spend on the business. Travel, paperwork, maintaining equipment etc all counts. Without all that you wouldn't earn anything anyway.