Estimating self-employed income for tax credits

Bananas777

My husband is self employed and his tax year assessment period is August to August. However the tax credits year is from April to April. I've been trying to estimate the years income for tax credits is this correct? So for example this summer the amount was higher than the previous year for tax credits but the income goes into this present tax year? It's confusing. Is anyone else in the same position and what do you do. Thanks.

sheramber

The income from self employment for each year is the figure from the self assessment return for the same year.

So the income for 2016/17 is the profit figure for the 2016/17 self assessment return which is the profit for the period August 15- August 16.

Bananas777

But it asks for the profit / income from April 2016 to April 2017 in the form.

sheramber

Bananas777 wrote: »

But it asks for the profit / income from April 2016 to April 2017 in the form.

Which for a self employed person is the figure from the 2016/17 tax return.

You will see from the 2015/16 tax return ( 2016/17 is not available yet )it is for the period 6 April 2015 TO 5 APRIL 2016

Page SES 1
SA103S 2016
HMRC 12/15
Self-employment (short)
Tax year 6 April 2015 to 5 April 2016 (2015–16)

On that form your husband would enter his figures for the year ended August 2015 which is his self employed income for 2015/16

For the period to 5 April 2017 he will use the figures for the year to August 2016. So that is the self employed income figure for the tax credits.

Bananas777

OK I think I see, it's quite complicated isn't it. Do the tax credits check the amount against the award and will they understand if it is different / estimated I wonder as it's a different time period.

Darksparkle

Bananas777 wrote: »

OK I think I see, it's quite complicated isn't it. Do the tax credits check the amount against the award and will they understand if it is different / estimated I wonder as it's a different time period.

They could check self assessment but normally they'd ask the claimant to supply their business records if they have any concerns.

Bananas777

OK. It would be easier if his accounts ran from April and apparently there is a form to change to this. For now we have estimated up last years income and this years to try and average it out a bit. I just looked and found they do seem to take this sort of thing into account, for example it says-from the 'getting your tax credits claim form right' info.

f you use averaging because you're a farmer, market gardener or creator of literary or artistic works
You can't use averaging in your tax credits claim. So you need to adjust your total profits figure to take out the averaging.
You’ll have entered a figure in:
• Self-employment(full)pages,box72,or
• Partnership(shortorfull)pages,box11
If the figure in either of these boxes increases your profit, take this amount away from your total profits.
If the figure in either of these boxes reduces your profit, add this amount to your total profits.

sheramber

Unless your husband is a farmer, market gardner or creator of literary or artistic works you cannot average your figures.

2015/16 tax credit figure is what he declared as his profit in the 2015/16 self assessment return and the 2016/17 figure is the figure he will put in his 2016/17 tax return

If you want to change the accounting date to 5 April I would advise you to contact your accountant about it as it is not always straightforward.

Bananas777

To be honest, it is similar to those as he works on large robotics projects which can take years and then gets paid in one go- hence the larger amount last Aug to Aug, which he has also paid tax on, whereas it can result in a lot of outgoings on equipment etc at other times. So, it's not exactly one of those but similar in a way.

Icequeen99

Bananas777 wrote: »

To be honest, it is similar to those as he works on large robotics projects which can take years and then gets paid in one go- hence the larger amount last Aug to Aug, which he has also paid tax on, whereas it can result in a lot of outgoings on equipment etc at other times. So, it's not exactly one of those but similar in a way.

It doesn't matter if it is similar - only specific occupations can use averaging for tax purposes, no-one can use it for tax credit purposes. Your post suggests you have done some sort of averaging which you shouldn't be doing. You need to get his tax figures and use the same for tax credits as posted above.

It sounds like you need to get some advice for both tax and tax credits otherwise you could find yourself in a difficult situation.

IQ

Bananas777

OK, I have suggested this to him and now it is up to him to deal with it as it's not my self-employment and tax returns etc. I am just going by what he has told me. My own cont based ESA I enter as income and I also get PIP which is not included in the calculation. He has an accountant and they and his pass on the figures to me to use and it is usually an estimate due to the time of year of doing the claim. I will speak to him as the year progresses before the January deadline to confirm the income figure and see how things are progressing with him and from the accountant. If it was my business I would have more knowledge of the details. Thank you for your help though.