ESA and WTC help please

JT89

My brother currently gets Income Related ESA (work activity group) and PIP standard rate care. As he cant do a normal job, he wants to start working online from home (self employed). He wants to work 16 hours a week and start claiming WTC. He wouldn't be earning much if anything for the first few months, so he would be getting income solely on WTC and ESA and gradually phasing out ESA and/or WTC as he earns more money. I have read that on ESA you can work and earn up to £102 a week for up to a year without it affecting benefit. But, is this just for normal part time work or can he get it from being self employed part time work at home on WTC? How would this affect his ESA and housing benefit?
Any advice is appreciated, thanks

Horseunderwater

PWork at highest level is £101/week after tax/NI/expenses paid out. You need to fill in form PW1 - DWP send it to you. PW does not count as income so does not count towards tax or tax credits due to that. Nor should it affect housing ben/Council tax Support.

WillowCat

Apply for permitted work and stick to their rules - i.e. no more than 16 hours per week and the appropriate income restrictions.

When the business is confirmed as feasible you can close the ESA claim and apply for WTC - as far as I'm aware they can't be claimed together as for ESA permitted work you have to work less than 16 hours per week, and the minimum for WTC is 16 hours.

This link has the best explanation I've found, and covers self employment in the appendix

http://www.disabilityrightsuk.org/work-people-living-disability-or-health-conditions

Oops - already quoted above!

rogerblack

blondebubbles wrote: »

I could be wrong but I don't believe you can claim ESA and WTC at the same time. There is info here on permitted work for ESA - http://www.disabilityrightsuk.org/work-people-living-disability-or-health-conditions

I do not believe this is in principle the case, though has major issues.
It was presumably the legislative intent - but I believe there is in principle a hole, at least for some.

Firstly - for disabled people claiming tax credits, they need to work 16 hours or more.
To be entitled to permitted work (higher rate) you need to work 16 hours or less.

In principle - working exactly 16 hours might entitle you to both, with earnings up to the permitted work maximum (around a hundred pounds)

Secondly - earning under 20 pounds or so a week can be done without limit of time, under ESA.
In principle, if you could find some employment which under ESA rules came out to under 20 pounds a week, and under WTC rules was acceptable as 'legitimate' employment, possibly with a higher calculated wage - this may be possible.

I believe this would only apply to those on contribution based ESA - as on income based ESA, the extra income from WTC would likely remove entitlement.
Similarly - if not in the support group, your ability to do PWHL stops after one year.

Please note - this is a theoretical argument based on my understanding of the law.

I have not gone into either the tax credit, or ESA rules in the detail that would be required to actually do this.
Getting advice on if this is even possible is likely to involve several hours of a professionals time, already skilled in WTC and ESA rules.
(a random solicitor or welfare worker will not be able to help)

The obvious corollary of this is if trying PWHL - you have to work exactly 16.000 hours a week - as accepted by both sides - ESA and WTC or you may lose out and be hit by an overpayment on one or both.
If trying PWLL (20 pounds a week earnings according to ESA) - you run the real problem of WTC not accepting that it's a real business, and again leading to an overpayment of WTC.

JT89

rogerblack wrote: »

I do not believe this is in principle the case, though has major issues.
It was presumably the legislative intent - but I believe there is in principle a hole, at least for some.

Firstly - for disabled people claiming tax credits, they need to work 16 hours or more.
To be entitled to permitted work (higher rate) you need to work 16 hours or less.

In principle - working exactly 16 hours might entitle you to both, with earnings up to the permitted work maximum (around a hundred pounds)

Secondly - earning under 20 pounds or so a week can be done without limit of time, under ESA.
In principle, if you could find some employment which under ESA rules came out to under 20 pounds a week, and under WTC rules was acceptable as 'legitimate' employment, possibly with a higher calculated wage - this may be possible.

I believe this would only apply to those on contribution based ESA - as on income based ESA, the extra income from WTC would likely remove entitlement.
Similarly - if not in the support group, your ability to do PWHL stops after one year.

Please note - this is a theoretical argument based on my understanding of the law.

I have not gone into either the tax credit, or ESA rules in the detail that would be required to actually do this.
Getting advice on if this is even possible is likely to involve several hours of a professionals time, already skilled in WTC and ESA rules.
(a random solicitor or welfare worker will not be able to help)

The obvious corollary of this is if trying PWHL - you have to work exactly 16.000 hours a week - as accepted by both sides - ESA and WTC or you may lose out and be hit by an overpayment on one or both.
If trying PWLL (20 pounds a week earnings according to ESA) - you run the real problem of WTC not accepting that it's a real business, and again leading to an overpayment of WTC.

This was my theoretical understanding of it too. Whether it actually works in practice is another thing all together. I think the only problem my brother might have is ESA classing it as permitted work. Thanks for all the replies.

pmlindyloo

blondebubbles wrote: »

From my reading of it - it said permitted work had to be under 16 hours rather than 16 or under.

As I said, I don't know a great deal about ESA, that's just my understanding.

From my reading too:
https://www.gov.uk/employment-support-allowance/eligibility

There is no confusion.

If you are on ESA then you can apply to do permitted work. This must be for less than 16 hours not16 hrs or less.

If you work 16 hrs or more then you would come off ESA and claim working tax credits instead.

Horseunderwater

Small comment IIM - £101 = 16 hours at nat min wage exactly. So that was how I worked mine out when I was able to do PW.

my.new.elephant

Permitted Work is definitely under 16 hours. You can work up to but not including 16 hours

WillowCat

You also have to meet both conditions - under 16 hours and £101 per week. So if you get paid £50 per hour, you only get to work two hours....

rogerblack

Apologies yes - the above comments were based on me misremembering the 16 hours per week rule - it is in fact less than 16 hours for ESA.
_IF_ earning more than 20 pounds a week.

If in principle you could find a buisness that is asessed as under 20 pounds a week income by ESA rules, and earns enough to qualify as a legitimate buisness from the perspective of tax credits - working >16 hours can in principle be possible.