Self employed after the budget?

Gavin234

Do self employed people have to earn that new higher living wage x 35 hrs?

Or they are assumed to be earning that much? I can see many small new business starting up in the UK from now on.

rogerblack

That's not how it works.
If you're earning less than 35*NMW, you may be required to seek more/better-paying work.
If you are doing 35 hours of SE a week, and earning 16*NMW say you may be treated as if you were earning 35*NMW from the point of view of work-requirements.
But - your UC award will be reduced as much as if you were earning 35*NMW.

Icequeen99

rogerblack wrote: »

That's not how it works.
If you're earning less than 35*NMW, you may be required to seek more/better-paying work.
If you are doing 35 hours of SE a week, and earning 16*NMW say you may be treated as if you were earning 35*NMW from the point of view of work-requirements.
But - your UC award will be reduced as much as if you were earning 35*NMW.

Just to clarify it does depend on whether the OP is talking about current tax credits or UC.

IQ

rogerblack

Icequeen99 wrote: »

Just to clarify it does depend on whether the OP is talking about current tax credits or UC.

IQ

Quite.
Both UC, and WTC have gotten a lot less generous due to this announcement.

Marktheshark

WTC minimum income threshold .
The legislation makes no mention anywhere of minimum incomes.
If it does I await someone to post the wording of that legislation.

rogerblack

Marktheshark wrote: »

WTC minimum income threshold .
The legislation makes no mention anywhere of minimum incomes.
If it does I await someone to post the wording of that legislation.

Apologies, I was referring to UC.
WTC - you need to - after an initial period - be earning at least NMW profit.
If you do not do this, then you risk an investigation and the whole amount, and possibly penalties recoverable from the time they decide you were never going to make a viable business.

Icequeen99

Marktheshark wrote: »

WTC minimum income threshold .
The legislation makes no mention anywhere of minimum incomes.
If it does I await someone to post the wording of that legislation.

There isn't a minimum income floor in tax credits.

The tax credits legislation has been amended to say that the business must be on a commercial basis, with a view to realisation of profit and organised and regular.

HMRC will use NMW x hours to select cases for compliance review and will apply this test to those.

So the minimum amount is just used to select cases to examine further - the actual legal test that then has to be applied is as set out in my first paragraph.

I think Roger thought you were talking about UC where there is a minimum income floor in the legislation.

IQ

Marktheshark

Icequeen99 wrote: »

HMRC will use NMW x hours to select cases for compliance review and will apply this test to those.

So the minimum amount is just used to select cases to examine further - the actual legal test that then has to be applied is as set out in my first paragraph.


IQ

If it is not covered in legalisation then the term for that action is "illegal"
To sanction someone not earning NMW on tax credits or by whatever name they want to call it, will be illegal and open to legal challenge.
But then again, they have lost several "benefit" cases recently for acting illegally.
Rules or tests or guidelines are not legislation.
Going to be interesting when someone takes them on in court.

rogerblack

Marktheshark wrote: »

If it is not covered in legalisation then the term for that action is "illegal"
To sanction someone not earning NMW on tax credits or by whatever name they want to call it, will be illegal and open to legal challenge.

This is wrong.
Under the powers given to them by legislation, HMRC have to decide - on the balance of probabilities - that you were not running a legitimate business.
The only constraints on this decision are that it follow the laws of the land, and not be so unreasonable that nobody would make the same decision.

The DWP have wide power under the law about what they consider a legitimate business.
Exactly what rules they choose to use can be appealed in individual cases, but not to wholesale challenge in general.

The 'losses' by the govenment on benefits judicial reviews recently were all on narrow technical grounds, not 'fairness'.
If the government is unfair, or even outright discriminatory against normally protected groups - it is allowed to do this if there is good (financial) reason.

dataloss

You have to either earn the minimum wage or show your business is legitimate and viable if and when investigated and it's been that way since the Autumn Statement last year. Been through this myself and case was closed yesterday after 5 weeks.

Icequeen99

Marktheshark wrote: »

If it is not covered in legalisation then the term for that action is "illegal"
To sanction someone not earning NMW on tax credits or by whatever name they want to call it, will be illegal and open to legal challenge.
But then again, they have lost several "benefit" cases recently for acting illegally.
Rules or tests or guidelines are not legislation.
Going to be interesting when someone takes them on in court.

I think you are misunderstanding what I said.

The new legislation for tax credits applies to all self-employed people.

As with all areas of tax credits - HMRC run risk profiles to identify cases to investigate more closely.

The way they select cases in this particular area is looking for people earning below NMW.

During the compliance check - they apply the legal test I outlined above. Nothing to do with NMW x hours. If the person passes the test then there is no issue about their earnings, if they don't then they can appeal.

I don't quite understand what part is illegal.

HMRC are free to check any claims they want and select them using whatever method they want as long as when they make their decision they apply the legal test.

IQ