Self employment and Benefits

Tabitha_T

Hi, can anyone help with the following, please?
I'm trying to further a new (knitting) hobby into a small business. I understand that any net profit will take away (£ for £, bar a tenner) from my Pension Credit amount, but, if I register as self employed will I be required to declare that I am paying myself the national minimum hourly wage? (even if I am not actually earning very much money?) I remember reading that if you went self employed, HMRC were planning to assess people as working for a minimum hourly wage, even if their ultimate net profit didn't reflect this. I want to work approx 24 hrs per week, but after expenses and materials I don't expect to be in a profitable situation until maybe Year 2/3 (when I have paid off my knitting machine costs etc).
Any help gratefully appreciated.
Cheers, Tabs

rogerblack

The NMW assumption applies for tax credits.
That is - if you're earning a tenner a week, and yet claiming to do 30 hours a week, you're going to have a problem.
If it's PC - that is not an issue - it's actual earnings that matter.

Tabitha_T

I am also in receipt of CTC at the moment. The CAB said my PC would reduce by the amount of my profit and would switch over to WTC, instead. This does seem very confusing! Basically, I am able to work around 25 hours/week, and may end up earning between £50-£75 per week, i.e. sell a couple of jumpers per week, but with start up costs and machinery etc it wouldn't be actual net profit I suppose. I'm unsure of what to declare in terms of any projected figures. If I tell Tax Credits office (after registering with HMRC)that I'm starting up self employed but don't expect a net profit, certainly not in the first year, are you saying that's going to cause me a problem? Thanks

Tabitha_T

Thank you very much, I'll have a good old read of those. Tabs x