Advice needed - Housing/CT Benefit being self-employed

Jemd

Hi,

I am new to this forum and was really hoping someone would be able to offer their opinion on my situation:

I was recently made redundant from my job. The day after I finished I did a joint claim for JSA, HB and CTB online. The job centre have been great, cannot fault them, and my job seekers came through without issues after a few weeks.
However, HB and CTB has been very stressful. Basically I want to know if anyone thinks that I will actually get it:
In addition to my paid job I am also registered self-employed for work that I do at home. In the year 11/12 I did quite well and as an extra income.
In this year between April and June I earnt £1700 which again isn't bad.
However, given the nature of the work that I do I haven't received any work from my self-employment since June and dont expect any more until maybe October/November but it is hard to tell.
I informed the job centre about my self-employment and because I am not earning any money from it they said that I am eligible for JSA as long as I tell them if and when I receive work.

The housing benefit people did not know anything about my self-employment even though I have a copy of the joint claim that I did online and clearly ticked YES to self employed. My HB case hadn't been dealt with anyway, but when I went in to check on my application last week and to take in an additional bank statement I happened to mention that the money that I had saved in my account was for my self-employed tax. I didn't realise they didn't know. The woman gave me two lots of additional forms to fill in. I sighed and asked whether it was likely that I will get it and she said she really didn't know but that she recommended that I still pursue the claim.
However, she said that what they might do is average out my self-employment over the year and base it on that. I asked how could they do that when I don't know what I will earn? The year of 10/11 I earnt less than half what I did for 11/12 so you really cannot guess/estimate.
Sorry for the essay but I wondered if anyone had any thoughts on my situation. I'm sick with worry as I am now in 6 weeks arrears with my landlord - they have been supportive so far but I am concerned. I'm desperately seeking work but cannot think about anything but this at the moment. I have never applied for any type of benefit before and I have always paid my rent on time so I feel completely lost and don't know what to expect from all of this.
Thanks

benefitbaby

If you are not sure how much you earn, or there is some other reason for uncertainty (as described in your post), the council may ask to see any correspondence you have had with the local income tax office, or about your National Insurance (NI) records. If you keep accounts, you should produce these as evidence of gross earnings. The council will use these to estimate your likely income over the forthcoming benefit period.

There are three stages in working out your self-employed earnings. The first is calculating the gross profit of your business. In the second stage, deductions – which are called allowable expenses – are taken away from the gross profit to give the net profit of the business. In the third stage, tax, NI, and pension payments are taken away from your net profit to give your net earnings.
Calculating profit

The first stage in working out your earnings from self-employment is to calculate the gross profit of your business. If you have more than one business, the profit from each will be calculated and taken into account separately. If you are in partnership, then only your share of the profits will be taken into account.

In working out the total gross profit of your business the council will not make any deductions for the following amounts in your business records or accounts:

• money you spend on new equipment or to set up or expand your business and any amounts for depreciation or write-off
• domestic or personal expenses not essential for running the business
• money spent on business entertainment or meals
• amounts equal to losses you suffered before your income was worked out for HB/CTB
• amounts equal to losses you have suffered in running other businesses.

Any losses you have during the assessment period will count as nil income. This means that your earnings are not compensated by losses you have made.
Net profit


The next stage in working out your self-employed earnings is to make the following deductions (if they apply) from your gross profit to give the net profit for the business:

• repayments of capital on any loan you have used to repair or replace the things you need for the business – such as tools, plant, equipment, or machinery – to the extent that the cost of the repair was not covered by any insurance payments
• any income you have used to repair the things you need for the business to the extent that the cost of the repair was not covered by any insurance payments
• interest you pay on loans that you took out for the purposes of the business
• the VAT you paid in excess of the VAT you received
• any expenses you have to pay for the purposes of the business
• bad debts (those that have been defaulted).

The net profit is then used as the basis for working out your net earnings from that business.
Net earnings


The council takes away the following from the net profit to give your net earnings from the business:

• the council’s calculation of the income tax for which you are liable
• the council’s calculation of the National Insurance (NI) contributions for which you are liable. These will be the flat-rate Class 2 or the profit-related Class 4 contributions, or both
• half of any contributions you make to an occupational or personal pension scheme.

After these deductions are made, what is left is your net earnings for this business. Your average weekly earnings are then worked out, and at this stage any earnings disregards may be applied (if you are a single person with no disabilities this will be £5 per week).


It is up to you to make sure that the council has all the information it needs to work out your earnings for HB/CTB. If your accounts are unlikely to give enough information for the council to work out your earnings, you should keep a note of all your receipts and payments. If you do not have proper records of your business, your council will have to make its own estimate of what your earnings may have been.


If last year’s trading accounts do not accurately represent your earnings, the council may use a shorter period (for example the last three months) to work out your earnings.

Jemd

Hi,

Thanks for your post. My earnings are very easy to work out as I have no expenses or rather I don't claim for them as they are minute. I do a self-assessment at the end of the tax year and keep this. I've only done one so far but the next one is due and I was planning on doing in the next few weeks.
I told the council my earnings for last financial year and from April this year to present. My issue really is that I never know what work I am going to get - like most self employed people I guess. But this was never something that I relied on, as I had my main job, now it's all that I've got and it's nowhere near enough to live on and it's making my claim more complicated.
I guess I'll have to wait and see what they say and hope that I find a job soon.
Thanks