Housing benefit

kalle_2

Hi my husband is Self-employed, we had to apply for Housing Benefit and included depreciation of assets as an expense in our claim but where told that this is not a eligible expense.

Does anyone know if that is true?

Caz3121

kalle wrote: »

Hi my husband is Self-employed, we had to apply for Housing Benefit and included depreciation of assets as an expense in our claim but where told that this is not a eligible expense.

Does anyone know if that is true?

it is true

http://www.hackney.gov.uk/Assets/Documents/self-employed-advice-htbandctb.pdf

We cannot accept your tax return as proof of your self-employed
accounts. This is because we do not allow certain expenses that
are taken into account for tax purposes when we are working out
Housing Benefit or Council Tax Benefit.

Which expenses are not taken off?
The benefit rules do not allow certain expenses, even if they are
allowed for tax purposes. These include:
• business entertaining;
• depreciation (the loss in value due to wear and tear and so on);
and
• capital repayments on a business loan (repayments of the
amount you borrowed but not the interest).

coffeelover65

The decision is correct, depreciation costs aren't taken into account when working out Housing Benefit.

kalle_2

It does not seem fair. The money is lost for the business and private.
Can you please explain why that is?
And why is there a column in the Benefit claim form when it is not an eligible expense?
Sorry I am asking all this questions?
What about child tax and working tax credits?

coffeelover65

I've never seen anything from the DWP guidance or regs to explain why depreciation is not allowed, at a guess I'd say because it has no bearing on a persons ability to carry out their work. For example, if you were a courier and the van you owned depreciated from £5K to £4K it would not affect a persons ability to carry out their work.

If the claim form has an entry for depreciation as an allowable expense its been badly designed as its not allowable.

Not sure what you're referring to regarding tax credits, if you're asking why they allow depreciation and it doesn't apply to HB/CTB it all comes down to the different regulations between the different benefits.

fishybusiness

I found this when I was self employed. The issue was always getting ahead, ie having enough income to grow the business when the benefits system was taking away what I earnt on their sliding scale.

It's fair enough, just tough to deal with.

In the end, I turned my business in to a limited company and paid myself a weekly wage. There were never any large assets in the business, but depreciation etc were contained in the company accounts, which was a seperate legal entity.

The council wanted to see my income documents each year, and asked me about company assets, but it was never a problem, and it allowed me some free space to build my business.

kalle_2

Hello,

Thanks for your message.

Do I understand you correct, if the business is limited then the assets will be accepted for housing benefit?

It is just so difficult at the moment to predict your income with the construction industry down and the bad weather on top.
Because we did not know that assets are not included we now have to pay back one year.
I hope we will earn enough soon to come of Benefits. ( had enough)

kalle_2

coffeelover65 wrote: »

I've never seen anything from the DWP guidance or regs to explain why depreciation is not allowed, at a guess I'd say because it has no bearing on a persons ability to carry out their work. For example, if you were a courier and the van you owned depreciated from £5K to £4K it would not affect a persons ability to carry out their work.

If the claim form has an entry for depreciation as an allowable expense its been badly designed as its not allowable.

Not sure what you're referring to regarding tax credits, if you're asking why they allow depreciation and it doesn't apply to HB/CTB it all comes down to the different regulations between the different benefits.

Thanks you are a great help.

missapril75

coffeelover65 wrote: »

If the claim form has an entry for depreciation as an allowable expense its been badly designed as its not allowable.

Or it's just to highlight exactly how much the normally allowable expense (tax purpose) is so they get the calculation correct for benefit purposes.

real1314

HMRC don't allow depreciation either. HMRC use capital allowances rather than depreciation (doesn't matter if it a ltd co or not). I don't know much about what HB use, but don't they use capital allowances in the same way as HMRC?

Looking at the leaflet from Hackney they allow "money used to replace equipment" - which is effectively a capital allowance.
But it differs from depreciation in that it's only replacement equipment spending that counts - this probably prevents manipulation of profit/loss to some degree and reflects the fact that means tested benefits are there to help with the hard times, rather than as an ongoing support to a business that cannot support those running it.

The poster above who says it's not fair as it stops him expanding his business rather proves the point - why should the taxpayer support the expansion of your business?