Going Self Employed As A Writer

Truegho

I am contemplating going self employed as a writer. However, I need to know where I stand in regard to claiming Working Tax Credits as a sole trader. I have heard some horror stories about this new Universal Credit tha t is being introduced will phase out Working Tax Credit, consequently making it very hard for a person to start up their own business.

Is this true?

Also, when you tell the jobcentre that you want to start your own business, do you REALLY have to apply for the NEA and the loan, or is that just optional?

Gentile

well i don't think those Labour innovations called tax credits were introduced to help people start their business anyway. So your paranoia about UC is misplaced.

Horseunderwater

Not only that how would you prove that you have been writing for 30+ hours per week to HMRC? And yes they do check these things.

ChopinonaBudget

Horseunderwater wrote: »

Not only that how would you prove that you have been writing for 30+ hours per week to HMRC? And yes they do check these things.

As far as I understand it, UC requires the equivalent income of 30 hours a week at NMW. A great many jobs have more time researching/preparing than actual paid contact time (e.g. Lecturing, teaching, performing musician, writer, etc) and HMRC won't be round all of our doors checking that we are doing 30 hours paid contact time.
I know I don't, but I do bring in significantly more than 30xNMW.

orangeslimes

I know someone who is a self employed writer claiming working tax credits. They don't check up on her, but I think it is a bit difficult because her income fluctuates from month to month.
The job centre did provide her with support at the beginning. Sent her on courses, and she had access to a free office for a while.

Edit: She does bring in significantly less than minimum wage though, so I would be worried about her under this new system.

miduck

orangeslimes wrote: »

I know someone who is a self employed writer claiming working tax credits. They don't check up on her, but I think it is a bit difficult because her income fluctuates from month to month.
The job centre did provide her with support at the beginning. Sent her on courses, and she had access to a free office for a while.

Times are changing on this - they are really cracking down on those that claim to be working thirty hours but their income does not match this. She (anyone in this position) needs to keep a diary of what she is doing to make up those hours - and be aware that people have had their awards pulled upon audit (for the whole year, not just from the point of the decision onwards).

ChopinonaBudget

orangeslimes wrote: »

I know someone who is a self employed writer claiming working tax credits. They don't check up on her, but I think it is a bit difficult because her income fluctuates from month to month.

Good point. My income also fluctuates wildly, but I give WFTC an estimate of my yearly income, and give them actual figures for each retrospective year for them to adjust my claim every April. As I have been progressively increasing my earnings since I began teaching 15 years ago, I inevitably end up paying back an overpayment. There is no other option that to do this though, as it is completely impossible for me to do more than estimate what my yearly income is until the year is finished.

If I recall, for your very first year, you give them an estimate of your earnings, and they calculate any over/under payments once the year is up and you have a set of accounts.

Would you be better off perhaps taking a part time job while you build up some experience/clients with your writing? It's unlikely with something like writing that you would be instantly earning NMW equivalent of 30 hours per week.
Maybe even a full time job with starting to write out of work hours.

I have a great many friends/colleagues who teach music, and it took them all (and me) many years before we were able to jack in the safety of PAYE job and go full time.
Even last year I was having to take on extra work as an LSA to make ends meet,

BigAunty

The criteria for WTC on the HMRC website for the self employed specifically demands that the hours for work are spent on renumerative employment, in expectation/anticipation of payment, not just out of hope that it will lead to payment. For example "these are only allowed where they are necessary for the activity to be performed (and so it can be said there is an expectation of payment for this time). "

How much of what you intend to do qualifies as directly renumerative?

This manual is perhaps for HMRC staff use but gives you some idea of what they are looking for

Artists, writers and craftsmen
Creative activities are notoriously time consuming, and the amount of work accomplished each day can seem disproportionately small for the amount of effort spent. Likewise, the amount of money received for the products may seem to represent a very poor return for the labour. In cases of this kind the issue is not likely to be the number of hours worked, but whether the activities qualify as remunerative work.

http://www.hmrc.gov.uk/manuals/ccmmanual/CCM6760.htm

Here is another link to define actual work activity that qualifies towards the hours

http://www.hmrc.gov.uk/manuals/tcmanual/TCM0126220.htm
http://www.hmrc.gov.uk/manuals/tctmanual/tctm02453.htm

BigAunty

Truegho wrote: »

...

Also, when you tell the jobcentre that you want to start your own business, do you REALLY have to apply for the NEA and the loan, or is that just optional?

I am not aware of any compulsion to join the NEA. However, since they help with finances, business plans, mentoring perhaps this planning is an important part that either contributes towards the success of the business or makes clear that it's not feasible.

BigAunty

Truegho wrote: »

.... I have heard some horror stories about this new Universal Credit tha t is being introduced will phase out Working Tax Credit, consequently making it very hard for a person to start up their own business.

There are no horror stories with UC - the papers set out very clearly what is expected from a self employed claimant. This is that they should aspire to earn at least the NMW from their activities once the business is established and that the govt explicitly wish to wean the self employed off long term state subsidies.

They have already identified that under UC the outcome of the greater conditionality compared with tax credits is that some self employed with unsuccessful businesses will close them, others will seek regular employment alongside it.

Dig out the published govt info on UC as it stands for the SE instead of wondering about rumours.

For example,

Self-employment start up period

Ministers recognise the need for claimants who are setting up a business to be given time to establish themselves and find sources of support. Therefore where a claimant has been self-employed for less than 12 months, a start up period will be granted. This means that claimants will not be required to satisfy work-search or availability requirements, and the Minimum Income Floor will not be applied thereby giving them time to concentrate on developing their business.
Ministers have listened to the views of stakeholders and as a result have decided to allow a new start up period every 5 years rather than once in a claimant’s lifetime.

http://www.dwp.gov.uk/policy/welfare-reform/universal-credit/latest-on-universal-credit/

shedboy94

ChopinonaBudget wrote: »

As I have been progressively increasing my earnings since I began teaching 15 years ago, I inevitably end up paying back an overpayment. There is no other option that to do this though, as it is completely impossible for me to do more than estimate what my yearly income is until the year is finished.

If your income increases each year, why don't you overestimate your income to prevent an o/p?