Put Off Going Self Employed As A Writer

Truegho

citricsquid wrote: »

A bunch of years ago I started running a couple of websites as a hobby, spending over 60 hours a week working on them in my free time because I enjoyed doing it and thought maybe one day it'd turn a viable business. Fortunately for me eventually it did and the business went on to generate millions of dollars in revenue and turned into my full time job for the last couple of years.

Much like me you want to turn something you enjoy into a business, personally I think that is fantastic and absolutely something you should do, however you do seem to be unwilling to invest your own time into this. Your business isn't going to be a business until it has a product, so why don't you invest your time into creating your product (writing your books) and then once you're in a position where you can make money, turn it into a legitimate business with self employment registration etc etc?

Look at it from HMRCs side, someone wants to say they work 30 hours per week (and get the benefits that come with it) but can't show they've actually done any work. If you can't show that you've been instructed to do work and you can't show that you've been paid how can they be sure you've actually worked?

A stay at home parent could say they've started a business painting bedrooms, they've worked 30 hours a week for the last year and wants the benefits that come with it! Which bedrooms have they painted? Oh, it's their childs... in the house they own... that generated no revenue...

If you want to start a business and that business requires a product and that product is the result of your creative pursuits then you should invest your own time into creating the product then once you have a product that you're selling (and generating revenue from) turn it into a business.

Hi Citricsquid. Thanks for your reply. I am really pleased for you that your hobby turned into a profitable business, and I always take my hat off to anybody who achieves success.

In regard to my own business venture, I do intend to keep a full record of hours spent working on my business (e.g. promoting my books, getting traffic to my site via social networks etc etc). I have heard that HMRC are cracking down on all those who profess that they are working for themselves, and so I do concede that it is only right that when a persons says they doing 30hrs pwk on their business those hours should be genuinely accounted for.

missk_ensington

How many hours a week you work and how much you earn as a self employed person are entirely relevant. My business made a loss for the first 18 months with the start-up costs etc, so my earnings were £0 per annum on a 40 hour working week.

If you are putting 30+ hours into you business then you claim that on your application. 'Working' may constitute research, planning, correcting, driving to and from libraries, meeting with contributors, finding editors...

Don't forget these people on the helpline aren't self employed, they dont run businesses or know anything about being self employed, neither does your regular Joe with a PAYE job so it sounds odd to them. While it might not be advisable to go and become a writer that hardly pays anything, that is your decision to make not theirs

missk_ensington

citricsquid wrote: »

If you want to start a business and that business requires a product and that product is the result of your creative pursuits then you should invest your own time into creating the product then once you have a product that you're selling (and generating revenue from) turn it into a business.

That is absolute tosh. The definition of a business is providing a product or service that you intend to be financially remunerated for. Painting your kids bedrooms would never be a business, unless you were a tenant whose Landlord had agreed to pay you a fee for doing it. Whether you make money, whether you dont, whether its a naff business idea or whether its not has NOTHING to do with the tax credits.

If you are registered with HMRC as self employed, you aren't claiming JSA and arent in a full time job, and you submit a self assessment tax return, then you ARE self employed - whether you make a decent living from it or not is nobody's interest but your own. If you want to be a writer, and you can live off £200 a month plus tax credits, then you crack on with it and ignore the plainly inaccurate tosh that people are telling you.

Nbody can prove what work a self employed person IS or ISNT doing, yes it is open to abuse. Many people have long since realised they get more money as a self employed person earning nothing and getting tax credits, than being on benefits and getting hassled to find a job - its not a novel concept, whether you agree with it or not, they cannot penalise the millions of self employed people because there are a few who capitalise on it. Just like they cannot tell every DLA/Incapacity claimant with 'lower back pain' that they are faking it. Just like you cant tell the person you drove into the back of that they dont have whiplash.

Were not here to discuss the moral reasoning of the law, the OP simply wanted to know if he COULD be self employed and the answer is YES - so long as you register with HMRC as self employed and you submit a tax return on time.

notanewuser

You're right, missk, apart from the fact that tax credits for self employed people won't be as easy to claim as they are now soon. It will be assumed that you earn the equivalent of NMW for every hour you claim you work, and benefits will be based on that. For somebody so clued up on benefits this should not have escaped you.

So the OP can declare that he works 30 hours a week, but tax credits will assume that makes him £185 a week whether it does or doesn't. So if he's only making £50 a week he's going to be a bit screwed.

Icequeen99

missk_ensington wrote: »

How many hours a week you work and how much you earn as a self employed person are entirely relevant. My business made a loss for the first 18 months with the start-up costs etc, so my earnings were £0 per annum on a 40 hour working week.

If you are putting 30+ hours into you business then you claim that on your application. 'Working' may constitute research, planning, correcting, driving to and from libraries, meeting with contributors, finding editors...

Don't forget these people on the helpline aren't self employed, they dont run businesses or know anything about being self employed, neither does your regular Joe with a PAYE job so it sounds odd to them. While it might not be advisable to go and become a writer that hardly pays anything, that is your decision to make not theirs

Research does not always count as work for tax credits if you are not an established writer. See http://www.hmrc.gov.uk/manuals/ccmmanual/CCM6755.htm

Each hour of work must be done for payment or in expectation of payment or linked to an activity that is necessary part of the business to get that payment (for example book-keeping).

The OP can put in a claim and it is likely to be paid. But anyone who works with tax credits, or even if you look back at posts here recently, will know HMRC are now investigating self-employed claims where people have declared nil profit for 30 hours+ work. In many cases they are deciding that the work was done in hope of payment rather than in expectation of payment (it wasn't probable that payment would be made) so the OP needs to be sure he can evidence that. This is a particularly difficult area where arts related work is concerned as the line between hope and expectation of payment is a fine one.

IQ

Truegho

Icequeen99 wrote: »

Research does not always count as work for tax credits if you are not an established writer. See http://www.hmrc.gov.uk/manuals/ccmmanual/CCM6755.htm

Each hour of work must be done for payment or in expectation of payment or linked to an activity that is necessary part of the business to get that payment (for example book-keeping).

The OP can put in a claim and it is likely to be paid. But anyone who works with tax credits, or even if you look back at posts here recently, will know HMRC are now investigating self-employed claims where people have declared nil profit for 30 hours+ work. In many cases they are deciding that the work was done in hope of payment rather than in expectation of payment (it wasn't probable that payment would be made) so the OP needs to be sure he can evidence that. This is a particularly difficult area where arts related work is concerned as the line between hope and expectation of payment is a fine one.

IQ

What about if I start selling so many amount of Kindle books per week?

[Deleted User]

missk_ensington wrote: »

If you are registered with HMRC as self employed, you aren't claiming JSA and arent in a full time job, and you submit a self assessment tax return, then you ARE self employed - whether you make a decent living from it or not is nobody's interest but your own. If you want to be a writer, and you can live off £200 a month plus tax credits, then you crack on with it and ignore the plainly inaccurate tosh that people are telling you.

So to make sure that I understand you correctly:

Someone can tell HMRC they are self employed, say that they work 30 unpaid hours per week and never provide proof of ever making any revenue or doing any work and HMRC will allow them to claim tax credits?

From my brief reading of the HMRC website it states that is absolutely not true, it states:

Working Tax Credit
Working Tax Credit is based on the hours you work and get paid for, or expect to be paid for. You can claim whether you're an employee or a self-employed person. But unpaid work doesn't count for Working Tax Credit.

Writing a book, for yourself, with a view to maybe sell it one day is unpaid work, ergo it does not count towards tax credits. What the OP has been told is correct...

neverdespairgirl

Truegho wrote: »

In regard to my own business venture, I do intend to keep a full record of hours spent working on my business (e.g. promoting my books, getting traffic to my site via social networks etc etc). I have heard that HMRC are cracking down on all those who profess that they are working for themselves, and so I do concede that it is only right that when a persons says they doing 30hrs pwk on their business those hours should be genuinely accounted for.

My line of business is completely different, but nevertheless I'm still self-employed, so have to keep a careful track of hours, etc.

I'd strongly suggest that you make very detailed records as you go along of hours, etc. Not just hours worked, but what you've been doing, too.

For example:

21st May 2013

9am - 11am: working on XXXXX book
11.30am to 12pm: writing applications for work on XXXX website

12 pm to 1.30pm: contacting agents via email

3pm - 5.15pm: working on Y article


total hours worked - 7 hrs 15 mins


If you do it as you go along, it doesn't take much time.

Icequeen99

Truegho wrote: »

What about if I start selling so many amount of Kindle books per week?

That would be fine I imagine. Providing your hours stacked up if you are asked. I would suggest you keep a diary.

IQ

dktreesea

OP, if you are already earning income from your writing, you should be registering as self employed with HMRC and declaring that income. You can confirm this for yourself by calling the newly self employed help line at the HMRC.

Having registered as self employed, you can then contact the tax credits help line and apply for working tax credit. Declare your hours as 30 hours a week, if that's how much you work at your writing, and your expected income/net profits as, say, £2,400 for the current year - or rather for however many months remain, so say £2,000 for this first year, if that's how much you expect to clear this year.

It's not for the tax credits staff to question the viability of your business nor how much this works out at a year. If the self assessment/self employment part of HMRC want to challenge how genuine your business is, e.g. because you have only ever made a couple of thousand pounds a year from it, some time in the future, you can cross that bridge when you come to it. It certainly won't be in the first year of the business.

Following your application for working tax credits, you should then get an award notice, telling you how much they will pay you. Use this awards notice to get whatever else you may be entitled to, e.g. housing benefit.

A word of warning though. At some point, universal credit will come into being, at which point the minimum income floor will apply for benefits calculation purposes. This is currently set at the equivalent to what you would earn if you worked earning the NMW for 35 hours a week. So you should consider whether or not you are going to be able to build up your writing business up to that level in time for when the MIF kicks in.

Regarding ups and downs in income over the year, while this doesn't matter for the moment, i.e. your WTC award would be based on your current year's estimate, or, if already going for more than a year, the latest year's declared income on your self assessment form, I note a development reported on Hansard just recently, on the 20th of May, where IDS was asked about fluctuating income for the self employed and received this reply:

"We are aware that self-employed earnings often fluctuate from month to month. We are therefore looking at the feasibility of introducing a mechanism for carrying forward profits and losses in universal credit."

http://www.theyworkforyou.com/wrans/?id=2013-05-20a.155754.h&s=universal+credit+self+employed#g155754.q0