HB advice please ? self employed and confused .

Mr_Poves

Hi , please can someone clarify for me if -
My earnings this tax year for example are roughly £15000 , this entitles me to a very small amount of hb , but this is where it is confusing me .
I'm in the middle of replacing my work vehicle (van) and it's on finance .
I've asked on another board and I've been advised to put the full cost of the purchase through my accounts on cash basis this year .
So this is basically going to cut my profit in half , therefore I would have been entitled to a higher rate of hb than I have had .
I'm not after something for nothing , but just want to know if the advice I have received is correct , and will it be allowable as an expense ? Thanks in advance for any advice .

dippy3103

Do you use the vehicle solely for work, or do you have personal use also?

Mr_Poves

Hi , it's solely business use .

Housing_Benefit_Officer

Normally we use the last years accounts to pay the coming years benefit. Once a year we ask for accounts for the previous year and use them to pay the following years benefit. We won't go back to April 2015 because you have purchased a vehicle at the end of the financial year.

Mr_Poves

Housing_Benefit_Officer wrote: »

Normally we use the last years accounts to pay the coming years benefit. Once a year we ask for accounts for the previous year and use them to pay the following years benefit. We won't go back to April 2015 because you have purchased a vehicle at the end of the financial year.

Hi , thanks for that , could you enlighten me a little further please , you may have to excuse my ignorance .
Can you advise my best course of action then please ?

paddedjohn

Only earning £15k profit it's probably not savvy to spend £7.5k on a van.

Mr_Poves

paddedjohn wrote: »

Only earning £15k profit it's probably not savvy to spend £7.5k on a van.

Here we go , always someone sticking there beak in , not once did I ask for advice on whether to purchase a vehicle or not , I'm asking a totally different question regarding how to put it through my books without it causing massive issues with housing benefit , which I may add is about £280 for the full year .
I've worked my way up for the last few year's from nothing and being at the job centre to having an almost self sufficient situation , the new vehicle is taking me towards pastures greener , onwards and upwards , thanks for the useless comment by the way .

Housing_Benefit_Officer

Mr_Poves wrote: »

Hi , thanks for that , could you enlighten me a little further please , you may have to excuse my ignorance .
Can you advise my best course of action then please ?

Mr_Poves wrote: »

Here we go , always someone sticking there beak in , not once did I ask for advice on whether to purchase a vehicle or not , I'm asking a totally different question regarding how to put it through my books without it causing massive issues with housing benefit , which I may add is about £280 for the full year .
I've worked my way up for the last few year's from nothing and being at the job centre to having an almost self sufficient situation , the new vehicle is taking me towards pastures greener , onwards and upwards , thanks for the useless comment by the way .

First I will give you the bad news.

Capital expenditure isn't an allowable expense for Housing Benefit purposes.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/236962/hbgm-bw2-assessment-of-income.pdf

W2.352 Do do not make deductions for the following expenditure

• capital expenditure, that is expenditure on a capital item such as a taxi

• money used to set up or expand a business

• depreciation or write-off of equipment, etc

Perhaps some good news -

If I were you I would seriously consider changing from self employed to a Director of a Limited Company:-

W2.316 Office holders, such as company directors and others whose income tax is payable under

Schedule E, are liable for Class 1 contributions in the same way as employees. They are therefore
employed earners, and should be assessed as such.

We would assess your income on your Directors Remunerations and not your Companies profit.

A good accountant will help you. Only you can decide if this is a path to go down.

Housing Benefit system and the tax system run to completely different rules. What is allowable under the tax system as an expense may be prohibited by the benefits system. For the tax man you may show a loss but for Housing Benefits you may show a profit.

Mr_Poves

Thanks for that , I'd rather the vehicle purchase not affect anything as it's taken a while to get to this stage , so I definitely don't want hb backdated and paid in full all year etc , I just was not sure how to approach the situation , thanks for the advice you have given , it's appreciated .
I'm gonna go and see an accountant I think , once again thankyou .