Becoming Self Employed But Not Making Money to Live Off.

dktreesea

Op, the "mechanics" of setting up a business are;
1) register the business with the HMRC
2) put in a claim for WTC if you consider your business will be earning below the threshold in profits
3) once the claim for WTC is successful, apply for housing benefit and council tax benefit if you are renting

And yes, your scenario is typical of many product driven businesses where the owners claim benefits, i.e. they are constrained mainly due to lack of capital (as opposed to willing customers). But have faith. Over time, you will be able to build your stock up, so gradually your income should improve. In the meantime you will be able to claim benefits to supplement what could be a paltry income for a fair amount of time. So be warned; starting up a business this way could mean working for very little for a good number of years.

A word of warning though. Once UC comes in, for people who are self employed their level of benefits is not protected during the transitional period. That means on the day you transition over to UC (this is the current plan but UC is pretty fluid, it seems to me) if the DWP accept that you are gainfully self employed, then the minimum income floor will apply. This doesn't mean you have to be earning the FT NMW in profits, just that for benefits purposes you will be deemed to be earning the 35 hours a week NMW.

So maybe you should look over the projections for your business plan, and work out, at the current rate of capital injection, i.e. the building up of your stock, at what point will you be making the FT NMW.