Benefits: are business expenses subtracted from income? 30 June 2016 at 5:58PM edited 30 June 2016 at 6:04PM in Disability Money Matters 7 replies 750 views

lukeylukeluke3

I'm on ESA support group and would like to move off it even though I'm unfit for work.

I am considering buying and selling items for profit.

Will the full amount I sell an item for be considered 'income' or will the full amount minus the costs (shipping and the amount I purchased the item for (i.e. profit)) be the amount that is taken as 'income'?

Thank you for your advice in advance.

GlasweJen

You'd need to set up as a business or self employed person. Some expenses can be deducted from the business income but that wouldn't necessarily come off your income for benefits purposes.

You should try getting an appointment with a job centre advisor who can run through figures with you and they also give advice on going self employed.

lukeylukeluke3

Thank you for your reply.

GlasweJen wrote: »

Some expenses can be deducted from the business income but that wouldn't necessarily come off your income for benefits purposes.

This bit worries me, is there a list anywhere? I've tried google!

GlasweJen

HMRC would be a good place to start

DomRavioli

lukeylukeluke3 wrote: »

I'm on ESA support group and would like to move off it even though I'm unfit for work.

I am considering buying and selling items for profit.

Will the full amount I sell an item for be considered 'income' or will the full amount minus the costs (shipping and the amount I purchased the item for (i.e. profit)) be the amount that is taken as 'income'?

Thank you for your advice in advance.

No - income is all monies coming in. Profit is when you have deducted the costs.

lukeylukeluke3

DomRavioli wrote: »

No - income is all monies coming in. Profit is when you have deducted the costs.

Yes, so let's say that my costs are £30 and someone pays £60 leaving a profit of £30. Will the DWP say that this is £10 over the £20 allowance and deduct £10 from my ESA payment for the week or will they say (ie counting the profit)

Or will they say that this is £40 over the £20 allowance and deduct £40 from my ESA payment for the week, regardless of how much money is actually in my pocket afterwards?

Ames

It's only the profit that counts, not the sale price.

But there are other costs that can be taken into account. For tax purposes, you can include things like some of your heating costs, travel costs relating to the business (so petrol to get to the post office), cost of advertising if it applies. But these costs aren't necessarily allowed by the DWP.

So you need to do research, speak to an accountant and the Jobcentre as advised above, and keep detailed accounts for both the taxman and the DWP.

As you're on ESA there's also a possibility of it being permitted work if you do less than 16 hours a week, you can earn up to about £115 a week without it affecting your ESA. The DWP has to agree to it though. Or if you're working over 16 hours a week you might be able to get tax credits, although you'd need a business plan to eventually earn minimum wage.

lukeylukeluke3

Ames wrote: »

It's only the profit that counts, not the sale price.

But there are other costs that can be taken into account. For tax purposes, you can include things like some of your heating costs, travel costs relating to the business (so petrol to get to the post office), cost of advertising if it applies. But these costs aren't necessarily allowed by the DWP.

So you need to do research, speak to an accountant and the Jobcentre as advised above, and keep detailed accounts for both the taxman and the DWP.

As you're on ESA there's also a possibility of it being permitted work if you do less than 16 hours a week, you can earn up to about £115 a week without it affecting your ESA. The DWP has to agree to it though. Or if you're working over 16 hours a week you might be able to get tax credits, although you'd need a business plan to eventually earn minimum wage.

Thank you. Hopefully the DWP will allow me to try and gradually get off my feet like this rather than forcing me to do an either/or when I'm nowhere near fit for it yet.