Changes to tax credits if hours employed change

Local_Lass

Hello,

I hope someone might be able to help me as I'm seriously considering making some changes to my life and need to be able to make a decision based on more information than I currently have ... and I'm hoping someone out there might be able to offer some advice!

I am a 42 year old single parent of a 12 year old daughter and I currently work 30hrs per week for my local authority with a gross salary of £14k p/a. With severe austerity measures making life harder for everyone within the authority, I heard yesterday about some big changes to my job which are going to make an already stressful and difficult job even harder to do, in an environment which is becoming more political and soul-destroying with every day that passes. I mostly love my job but hate the increasingly worsening conditions in which we are expected to work, and a spate of events in real life (friend died of heart attack completely out of nowhere, others being diagnosed with cancer and I was involved in a car accident myself) has led me to the conclusion that life is far too short and precious to spend it so stressed because of work. My GP had already told me that some on-going health issues are as a result of too much stress in my life prior to that little cluster of events,so I reckon there's no hiding from it now!! The stress of my job has been really starting to impact on my relationship with my daughter (who's getting to 'that' age!!) and I hate finding myself being so short tempered with her because I'm dragged down by life - I know what's important in life and I just need to change the balance so that I can put that in to practice!

I have been tentatively making steps towards setting up my own business making and selling home decor and special occasion stationery online, with a view to being able to go self-employed in the future - I've been working in the evenings when life/energy allows. The last few weeks have got me thinking about this more and more, particularly as I have been off work due to a whiplash injury sustained in the accident and have heard about all the politics and backstabbing going on at work whilst I'm off. I have too many responsibilities to just vote with my feet, as much as I would like to, so I am now seriously considering asking the council if my post can be made job share so that I can drop my hours and spend more time working on building my own business. Ideally I would be looking to drop my hours to 20hrs per week so that I just work mornings, leaving my afternoons and evenings free to concentrate on building my own business up.

I would really appreciate any advice on where I would stand regarding tax credits if I were to do this. I currently receive CTC and WTC and these make a huge difference to our lives. I understand that I will still be able to claim these, and as I will be working as many hours, if not more, for myself as I currently am in my council job, I would still meet the criteria for working 30+ hours p/w but I am unsure about how to go about making the change, and when to do it, as I do not anticipate making any profit for at least the first few months of working for myself. Add in the new Universal Credit coming in and I haven't got a clue where I stand.

I wish I could do short and concise, but alas no, I suffer from a chronic case of waffleitis! If you have got this far through this long, rambling post and have any words of wisdom to offer then I would very much appreciate hearing what you have to say.

Many thanks in anticipation.

Horseunderwater

For a start as a single parent you only need to work 16 hours - the 30+ just gives you an extra element, which as you point out would still be payable providing you can provide proof that you are doing those hours self employed.
If your income drops by more than £2.5k then there may be more CTC paid, but if less then for remainder of year it would probably stay the same. This is due to the income disregard. Am sure one of the other posters on here will be able to help some more.

MissMoneypenny

For Universal Credit. As a self employed person on Universal Credit: your claim will be worked out on you earning £220.85 per week; even if you don't earn that much (35 hours per week at national minimum wage). Your hours at NMW, are worked out on your daughter's age.

They are going to make an exception for those in their first year of business only. They will not allow people to keep starting up new business every year, to try to get around the amount their UC claim is based on.

Something else to think about is that self employed people who want to make their business work, put in long hours: a lot more hours than a council worker does per week. As a guide: my daughter puts in at least 100 hours a week to make sure she earns a living from her business. Being self employed and wanting to earn a living wage, is not an easy option.

Can you get your business up and running (and earning a fair income) before you give up your PAYE job?

Local_Lass

Thank you both very much for your replies, they are really appreciated. As much as I would love to, I have more sense than to give up my job and go fully self employed all in one go, that's why I am more inclined to try and see if I can cut my hours in my 'paid' employment whilst trying to launch my own business at the same time. I'm just a little concerned about how the credits will work as when I next fill in my renewal and they ask for my 2013/14 income it would be higher than what I would be receiving at that point as my income would already have dropped. It's just a case of trying to get the timing right, and the right balance of hours. I don't mind working my backside off to get my business established, I just know that there's got to be a better way of living than selling your soul to an employer who just wants the flesh off your bones!!!