self employment,tax credits andincome??

azmilligan71

ok, hopefully someone can help....I am hoping to start up a small cleaning business in august on a part time and term time basis as i have three children. I have someone who is able to use my services for 17.5 hours per week for 39 weeks of the year (term time) on that basis in works out £5119 per annum. I have contacted tax credits and they have confirmed they still treat me as a full time person however when working out my entitlement I gave them the approx annual figure £5,119 I know I wont need to pay tax or NI as under the threshold but if I have expenses to take off that figure will my entitlement reduce? or do they base it on my gross income? sorry if sound dumb.......ok also have another query, because I am only working term time in I will only be earning in those weeks I will have some weeks with no income, however they people I will be cleaning for are happy to pay me the annual figure over a 52 week period rather than over 39 weeks,I am happy with that but not sure how that works for tax man etc as I have never been self employed before......or am I better invoice weekly and just put money aside for the unpaid weeks?? sorry if this doesnt make sense lol as you can see getting myself very confused .......HELP please...

shedboy94

azmilligan71 wrote: »

ok, hopefully someone can help....I am hoping to start up a small cleaning business in august on a part time and term time basis as i have three children. I have someone who is able to use my services for 17.5 hours per week for 39 weeks of the year (term time) on that basis in works out £5119 per annum. I have contacted tax credits and they have confirmed they still treat me as a full time person however when working out my entitlement I gave them the approx annual figure £5,119 I know I wont need to pay tax or NI as under the threshold but if I have expenses to take off that figure will my entitlement reduce? or do they base it on my gross income? sorry if sound dumb.......ok also have another query, because I am only working term time in I will only be earning in those weeks I will have some weeks with no income, however they people I will be cleaning for are happy to pay me the annual figure over a 52 week period rather than over 39 weeks,I am happy with that but not sure how that works for tax man etc as I have never been self employed before......or am I better invoice weekly and just put money aside for the unpaid weeks?? sorry if this doesnt make sense lol as you can see getting myself very confused .......HELP please...

You wouldn't be treated as working FT - you would be treated as working 17.5hpw all year round though.

Sounds a bit strange though.......you have someone who needs 17.5hrs worth of cleaning done.....is it a private house or a business? If it is a house then it must be a big one! Also if someone requires 17.5hrs worth of cleaning done a week, then what are they going to do for the other 13 weeks?

davehughes182

you wouldnt be entitled to receive WTC on them hours becasue even though you are being paid annually, you only work 39 weeks so it averages out at 13hrs pw which is below the required 16. Have you informed TC you are working 39 weeks of the year?
Your income that is required for TC is your NET profit. So after expenses etc.

Icequeen99

shedboy94 wrote: »

You wouldn't be treated as working FT - you would be treated as working 17.5hpw all year round though.

Sounds a bit strange though.......you have someone who needs 17.5hrs worth of cleaning done.....is it a private house or a business? If it is a house then it must be a big one! Also if someone requires 17.5hrs worth of cleaning done a week, then what are they going to do for the other 13 weeks?

I agree. I can't see how the term time worker type rules would apply here. So you could only claim the weeks you actually work.

IQ

azmilligan71

thanks for comments,yeah defo checked with tax credits and they base your entitlement when term time as working all year and 17.5 per week on a 39 week basis you are entitled to working tax credit and tax credits I was employed by a bank before as term time and only 18 hours per week and I got it for 4 years on that basis........maybe because I am a single mum of three makes a difference.

Icequeen99

azmilligan71 wrote: »

thanks for comments,yeah defo checked with tax credits and they base your entitlement when term time as working all year and 17.5 per week on a 39 week basis you are entitled to working tax credit and tax credits I was employed by a bank before as term time and only 18 hours per week and I got it for 4 years on that basis........maybe because I am a single mum of three makes a difference.

That is correct if you are a proper term time worker like you were at the bank.

But the arrangement you have is not the same as one under an employment contract.

What exactly did you ask tax credits when you phoned them? Did you say you are self-employed and only working 39 weeks of the year? or did you say I am only working term time. I think if you said the latter you probably would have been given the answer you say, but wouldn't get the same answer if you said the first thing.

EDITED to add: The rules for term time workers require the person to work at a school, other educational establishment or other place of employment. Yours doesn't fall under those.

see here: http://www.hmrc.gov.uk/manuals/tctmanual/TCTM02458.htm
IQ

azmilligan71

getting worried now.......just came off the phone to tax credits again and explained situation that would be doing 17.5 hours self employed for 39 weeks term time and not working during school holidays and actually said that someone said that the hours would be averaged over 52 weeks not 39.....he double checked with manager and verified what I would be doing ie cleaning,ironing and general duties said 17.5 hours oever term time 39 weeks and not working over holidays is classed as working 16 hours or more throughout the year!! I have now had that confirmed fours times........

azmilligan71

just for clarification what is 'proper term time' in bank as opposed to term time self employed?? still doing 17.5/18 hours for same amount of weeks (39) as did in bank as will be self empl.oyed only difference working for myself and paying own tax and NI and not for bank

Icequeen99

I never said they would be averaged over 52 weeks, you don't average like that for tax credits.

What I was saying is that I think under the actual legislation you would be treated as working 39 weeks a year and not working the other 13 weeks.

The difference between working in a bank and self-employment is that one is under a contract of employment and the other is not. Your employment contract is set up as a term time worker and you are paid each month across the year.

What you are doing as a self-employed person is choosing to work 39 weeks a year and not the other 13.

If you look at what I quoted from the HMRC manual it says:
This regulation enables people working in schools, other educational establishments or other places of employment (such as the Civil service) where term time working is available to continue to receive WTC during school holidays, or holidays which are broadly similar to school holidays, by taking these periods out of the calculation of normal working hours

You are not in a place of employment where term time working is available, you are self-employed.

So my view is that it doesn't apply.

I suggest you keep a note of the date, time and name of advisers you spoke to because I would imagine at some point in the future you may need to explain this to compliance when they look at your hours.

IQ

DaisyFlower

Term time WTC definately only apply if a formal employed contract and not to self employed people.

You could simply work through the holidays, surely the person needs a cleaner through the summer although just enough hours to qualify for WTC and no holidays sounds like a very luck find;)

azmilligan71

thanks again everyone.I have phoned AGAIN and fully explained my situation and put it several ways term time and working only 39 weeks of the year....and finally I got this answer after stating I have phoned several times and still dont feel comfortable with info given and I want to get it right and do everything correctly. Latest info given by a adviser is yes entitled to WFTC on 17.5 hours per week as 16 hours or more,not working on school holidays including xmas ones still fine still entitled to WFTC,however the summer holidays because not working for longer than 4 weeks I have 2 options, I can work for some of the summer hols so not continously not working more than 4 weeks or at start of hols telephone and advise not working again until end of summer hols and they will stop WFTC I then phone again at end of hols and start claim again,told entirely up to me what I do and they will calculate my entitlement on my annual net profit from my self assessment. I hope this information helps other people.......thanks goodness I have it all straight now.....hopefully. So I intend to work 2 weeks out of the 6/7 summer holidays so there is no break in my WFTC.......phew lol