Estimating self-employed income for tax credits

Icequeen99

Bananas777 wrote: »

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.

That's fair enough - but if his income estimate is wrong then the overpayment of tax credits will be for both of you.

If there is an accountant involved then this should be far easier.

Good luck!

IQ

Bananas777

However I think if there is an overpayment it will be WTC and therefore come off his part of the award, rather than the CTC. When the employment income goes up it seems this part if affected. As we have separate bank accounts he will have to deal with that from his business side.

Icequeen99

Bananas777 wrote: »

However I think if there is an overpayment it will be WTC and therefore come off his part of the award, rather than the CTC. When the employment income goes up it seems this part if affected. As we have separate bank accounts he will have to deal with that from his business side.

No, income affects the whole award although due to the way it is tapered if your income is low you may only see it affect WTC, but it could affect CTC if it goes higher. If there is an overpayment of WTC you will be each responsible 50/50 (for example if you were to separate, obviously i hope that isn't the case!).

Bananas777

Hopefully it won't result in that (but you never know)! Ok, thanks for your help.

Bananas777

Do you mean, if there is an overpayment which has to be repaid, it would affect both parts of the award equally (WTC and CTC). Thanks.

Bananas777

Also, wanted to mention I have tried the online chat service for tax credits and explained it all to them, but they transferred me to self-abasement who couldn't really help. So have tried contacting them for help.

The self-assessment person said the one done this August would actually be for the profit of the previous tax year (April 2015-2016) so would have been for the previous years award.

Bananas777

However, as I did the ta credits final award fro that person I had to use an estimate as he hadn't finished the accounts then, and as far as i know there is no way to change that once the renewal is done.

Darksparkle

Bananas777 wrote: »

Do you mean, if there is an overpayment which has to be repaid, it would affect both parts of the award equally (WTC and CTC). Thanks.

The income is used the calculate both WTC and CTC. They add up all the elements to reach the maximum you are entitled to. The total award is reduced based on income (after tapering and thresholds have been applied)

WTC is reduced first then CTC. So an increase in income could cause an overpayment in WTC or in both WTC and CTC.

When did he start self employed? August 2015? 2016?

Icequeen99

Bananas777 wrote: »

Also, wanted to mention I have tried the online chat service for tax credits and explained it all to them, but they transferred me to self-abasement who couldn't really help. So have tried contacting them for help.

The self-assessment person said the one done this August would actually be for the profit of the previous tax year (April 2015-2016) so would have been for the previous years award.

I think you need to speak to your accountant. HMRC can't advise you if you are giving them the same information as you have given on this thread.

The one done this August can't be for the 15/16 tax year as far as I can see. A 31st August 2016 year end would be taxed in the 16/17 tax year which you can't have done yet. The one that is being done now for tax would be for the 15/16 tax year and that would be his accounting period from 1 September 2014 to 31 August 2015.

IQ

sheramber

As IQ99 says income to August 2016 cannot be the income for the period ended 5 April 2016 as the income from 6 April to 31August does not exist at that time so how can you include it.


Self employed income is not taxed on a weekly/ monthly basis throughout the year as PAYE is . It is assessed on a yearly basis after the end of the accounting year.

You are getting yourself more confused by asking different people. You have three people advising on this thread , one person on tax credit chat and one on self assessment helpline.

The self employed income for a year is the year end figure that arises during the period 6 April one year to 5 April the next year.

If your year end is 5 April then the year to 5 April that finishes between 6April 2015 and 5 April 16 is the year to 5April 2016. So the figure for 2015/16 is the that for the year to 5April 2016.

if your year end in 31 AUGUST then the year to 31 August that finishes between 6 April 2015 and 5 April 2016 it the 31 AUGUST 2015. So the figure 2015/16 is that for the year ended 31 aUGUST 2015.

2015/16 year to 31August 2015

2016/17 year to 31 August 2016.

If your husband recently (2014 0r 2015) started self employment the actual figures could be different but will be based on the the same figures. Your accountant will advise on that.

However, the figure is still the figure that is entered on the self assessment return for that year.

As self employed accounts may not be finalised by the July renewal date an estimate can be given bit the final figure must be submitted by 31 January the following year, when the self assessment return must be filed by.