Need extra money, but self employed on HB, WTC and dont take a wage. Please help!

L.Underhill

Hi, this is my first post so please be patient with me. I've gotten myself into a bit of a state lately and I understand that I have been very stupid in not understanding my options and what I can do about my situation, but I am here for advice, so I hope you can help.

My partner and I are registered Self Employed, on Housing Benefit and receiving working tax credits. We are both over 28 years old, no children.

Throughout the summer we work away at festivals, running our own Henna tattoo business, which the money earned from these festivals, goes straight into our business account (Lloyds) and obviously the money in there cannot be touched for personal spending (i.e., food, clothes etc) and can only be used for other business expenses to help us expand. Its been growing very slowly over the last few years but we are beginning to see a nice rise in the money we put into the account each year now.

Anyway, come the winter, I have been doing a lot of art work, which has been very successful in selling, and again, the money earned either cash in hand and via online payment has gone directly into the business account. And my partner has been doing a lot of graphic design work, once again, money going straight into the business account. All declared and accounted for legally with HMRC and taxes.

Currently, because of our low income, we are receiving £92 per week in WTC, and just under £500 for rent a month from Housing Benefit. We live in a one bed flat that's £500pm privately let, but, because both of our creative art jobs are expanding, we are drastically running out of room.

So, my dilemma.

I have a personal bank account, attached to the business bank account, but obviously it has been left dormant for a long time, because we do not take any wages from our work. The £90 WTC we receive (which goes into my partners account, nationwide) just isn't enough any more to cover our bills food clothing and general living costs (some bills very overdue because of the low income and having no extra surplus money to survive on or pay these off). We dont give ourselves wages yet because we haven't earned enough yet to justify it.
I was wondering, if, hypothetically, I get paid cash in hand for a painting or other art work, would I be able to put the money earned from that, into my PERSONAL bank account, and be able to use the money from that as a top up for bills, and/OR a top up towards rent on a place renting for £550 ( if it was a one bed with a study I could work from, badly need the space!!) .. or would this be classed as me taking a wage? would I get into trouble for earning money and using it for bills/rent top up, seeing as we are receiving HB and WTC?
We need a bigger place, and I have bills to pay, but there is no extra money, and I don't want to fiddle the system.
Also, because art work is time consuming and the hours are sporadic, depending on if I lose my mind with a piece or not, I can't claim hours because it could be any amount of time, however, obviously I can declare the final income for a piece.
Most of mypieces can sell from anywhere between £30 for a print, to £200 for an original painting - and an original painting will maybe only sell once a month. So income on that side is maybe at a push somewhere between £80 and £200 a month, but, that all depends on the buyer, and anyway, the money goes into the business account. So its not money I can spend on rent or overdue bills.

I feel so stuck, because I just don't understand how I can help us to pay bills or move to a bigger place without somehow getting extra money from somewhere.

Its very overwhelming, and I just don't know what options I have.

Im worried if I put money into my personal bank account to help us out, that HB will stop, then we can't pay the rent, or that HB will be suspended and our landlord wont get his money. (We don't have a guarantor, asked around but sadly our family isn't in a financial position to help).

We are in a right old pickle. We just need the extra room to be able to expand our work, and to pay over due bills... but how?

what can we do that wont get us into trouble. Feel like Im losing my mind over this.

Please help us, any advice will be greatly appreciated.

And please be nice, this is a delicate subject and I wish I has asked for help sooner, so I know how stupid I have been.

Thank you for reading this far, look forward to your responses.

L.

stevemLS

L.Underhill wrote: »

Hi, this is my first post so please be patient with me. I've gotten myself into a bit of a state lately and I understand that I have been very stupid in not understanding my options and what I can do about my situation, but I am here for advice, so I hope you can help.

My partner and I are registered Self Employed, on Housing Benefit and receiving working tax credits. We are both over 28 years old, no children.

Throughout the summer we work away at festivals, running our own Henna tattoo business, which the money earned from these festivals, goes straight into our business account (Lloyds) and obviously the money in there cannot be touched for personal spending (i.e., food, clothes etc) and can only be used for other business expenses to help us expand. Its been growing very slowly over the last few years but we are beginning to see a nice rise in the money we put into the account each year now.

Anyway, come the winter, I have been doing a lot of art work, which has been very successful in selling, and again, the money earned either cash in hand and via online payment has gone directly into the business account. And my partner has been doing a lot of graphic design work, once again, money going straight into the business account. All declared and accounted for legally with HMRC and taxes.

Currently, because of our low income, we are receiving £92 per week in WTC, and just under £500 for rent a month from Housing Benefit. We live in a one bed flat that's £500pm privately let, but, because both of our creative art jobs are expanding, we are drastically running out of room.

So you put all the income into a bank account, don't draw a wage, claim to have no income and get benefit on that basis?


I suspect you are already "fiddling the system" if you are not mentioning this income and the money you have in the "business" account.

L.Underhill

It is a legitimate business account from Lloyds TSB, we keep every reciept for our books, and we get checked on a regular basis by HB and twice a year by HMRC in regards to tax and income. So yes. It is legit. Thanks for judging already.

And by successful, I mean that we are putting enough into the business account to be able to buy better equipment for our stall, liability insurance every year, and have more options to put more money into the account. Anything spent from the business account MUST be accounted for in receipts and proof which we provide without fail.

marliepanda

It may be legit but clearly you can't afford not to draw a wage. It would be lovely for everyone to set up a business and claim benefits to allow it to grow for years, but that's not life. If the business can't pay you a wage it's pointless and not viable.

merlin68

I dont understand why your not paying yourself out of business it is allowed, anyway you will come unstuck soon because from april you have to earn £153 a week or they'll stop your tax credits. So pay yourself £153 and youll be fine. Which probably wouldnt make any difference to your claim for benefits.

L.Underhill

Merlin, Thank You, do you have any links to the information about this and dates this will come into action please.

merlin68

There was a post on here, give me time to find it. You are allowed to pay yourself a wage i dont know who told you that you cant.

sammyjammy

Perhaps one of you could get a job? I really think you generally don't see anything wrong with what you are doing and trying to do but you are sadly mistaken.

L.Underhill

I did say I know I was stupid in not understanding my options. Please dont rub it in, I am very aware of my LACK of awareness. We want to move on with this legitimately and legally, so I am asking for help, not judgement.

jm2926

L.Underhill wrote: »

We are in a right old pickle. We just need the extra room to be able to expand our work, and to pay over due bills... but how?
L.

Pay yourself a wage for the work you are doing. If the "business" can't afford to pay 2 staff, then instead of them working for free, get a wage paying job and operate the "business" part time in your free time. Similarly if there is no profit in the business after paying its expenses (including wages) then it's not in a position to expand.

Tax credits are support to top up wages, not replace them while you squirel the cash away in a business account.

densol_2

I'll be less judgemental. As self employed you have all the money coming in - less legitimate business expenses going out. What the lay person doesn't understand about being self employed is under ACCCEPTABLE ACCOUNTING PRACTICES - called AAP - you can properly claim expenses like use of a van for business use and use of some of your home as a percentage of the whole. It's quite complex. As a result the net profit is reduced. Now HB are more picky as to what you can deduct than are HMRC ( for tax ) and tax credit people.

In the Autumn statement the government set out new criteria to judge whether the self employed business is viable. It has always been that you need to work in " expectation " of payment but it's got even tighter. Now one of the ways it's been suggested as a way of checking is to see how many hours are ' declared " as working x the national min wage.

So if I was a single mum then I only " have " to work 16 hours a week x £6.50. This I really should be showing a net profit of around £104 per week to justify being in business. That would be after the first year as many business invest in plant vans and equipment in the first year. The business does need to be commercial and with a view to .... Making a profit ( HMRC )

So with your business - you both need to have the net profit matching the hours you do or thereabouts the pass this new test.

My advice is to read up on expenses you can claim against money in - but keep in mind the business has to be viable. Lastly you don't draw " wages " as self employed - you spend your net profit as you want as that's your " income "

I hope this helps