Tax Credits Claim- Sale of Business

Virt

Hi folks,

HMRC have contradicted themselves 3 times and my local CAB is queued out the door every day.

In tax year 13/14 I sold my business. The actual business turned a small loss and I claimed under entrepreneurial tax relief for the sale amount.

I'm trying to claim for Tax Credits for the first time.

1. What do I put as my income on the form?
2. Do I include the sale of business amount and where on the form does this go?
3. My income in last tax year obviously included me running a business. I am no longer working as I will soon be a student. My earnings are zero. The form offers no space to inform HMRC that my current tax year will be nothing like last years. Any advice here?

Many thanks in advance.

antrobus

Virt wrote: »

...2. Do I include the sale of business amount and where on the form does this go?...

As far as I'm aware, the answers are 'no' and 'not applicable'.

There is no capital limit for tax credits, so it doesn't matter how much money you got from the sale of the business. Even if you made a capital gain on selling the business, I don't believe that a capital gain qualifies as income for the purposes of a means-tested benefit.

Virt

antrobus wrote: »

As far as I'm aware, the answers are 'no' and 'not applicable'.

There is no capital limit for tax credits, so it doesn't matter how much money you got from the sale of the business. Even if you made a capital gain on selling the business, I don't believe that a capital gain qualifies as income for the purposes of a means-tested benefit.

Interesting. Can anyone confirm this?

HMRC said that I was to put nothing in the Income From Self Employment section but to put the Sale Of Business amount minus my business loss minus the £300 threshold in the 'other income' box.

HMRC employee kept saying 'I think' and refused to provide a definitive answer. They are a disgrace. They said that the did not have a facility for me to write to them detailing my circumstances.

It would seem that HMRC are more than happy to allow you to guess at the answers or be put off from claiming altogether than providing advice and guidance to enable me, for the first time in my life, to take something from The System after putting in for all these years.

pmlindyloo

Virt wrote: »

Interesting. Can anyone confirm this?

HMRC said that I was to put nothing in the Income From Self Employment section but to put the Sale Of Business amount minus my business loss minus the £300 threshold in the 'other income' box.

HMRC employee kept saying 'I think' and refused to provide a definitive answer. They are a disgrace. They said that the did not have a facility for me to write to them detailing my circumstances.

It would seem that HMRC are more than happy to allow you to guess at the answers or be put off from claiming altogether than providing advice and guidance to enable me, for the first time in my life, to take something from The System after putting in for all these years.

I believe they are right.

£0 for income from self employment.

Other income. This is any interest gained from savings etc (see here: http://www.hmrc.gov.uk/taxcredits/start/claiming/income-hours/other-income.htm)

Any interest over £300 is taken as other income.

They are taking the sale of your business as other income minus the losses. So sale of business = £1000. Loss of business = £1000. so no interest gained = £0 (just an example)

If you are receiving any other interest from savings etc then you are allowed £300 per year so that is why they are telling you to deduct the £300 from that interest.

If you (and your partner if you have one) have no other 'capital' (see the link above for what counts as capital) then other income is £0.

Well, that's my understanding of it

PS Basically only interest over £300 a year is counted as other income for tax credit purposes. The actual capital isn't counted.