Work full time + sole trader questions

muddyl

Evening all,

I currently work full time on a low wage as I work within education so only term time.

I thinking if setting up as a sole trader as a part time job.

My question is, I currently get working tax credits and council tax reduction. What happens with these if I register as a sole trader too?

Darksparkle

Tax credits - will depend on your circumstances (single/couple/children/disabilities), working hours, income.

Generally speaking the more you earn the less you get but you'll need to be more specific.

muddyl

Darksparkle wrote: »

Tax credits - will depend on your circumstances (single/couple/children/disabilities), working hours, income.

Generally speaking the more you earn the less you get but you'll need to be more specific.

OK, obviously household income effects tax credits. I think what I really need to know is how the process works.
Do they pay as normal then recalculate at the end of year? Which would be easy enough to deal with as I could put money aside to cover any over payment.
Or do you estimate your income and they adjust it from the start? Which would run the risk of financial difficulties if I don't get as much work as anticipated.

Obviously I don't want my family to suffer too badly should things not work out.

roxy7699

You would need to notify tax credits of the change with an estimated earnings for the rest of the year. You technically could update this amount as and when it changes.
Normally they base your payments on last year's earnings unless it is a certain amount above that you earn (sorry not sure the threshold). So it may just be next year's that changes.
You will most likely be asked to prove your income and expenditure however.

Darksparkle

roxy7699 wrote: »

You would need to notify tax credits of the change with an estimated earnings for the rest of the year. You technically could update this amount as and when it changes.
Normally they base your payments on last year's earnings unless it is a certain amount above that you earn (sorry not sure the threshold). So it may just be next year's that changes.
You will most likely be asked to prove your income and expenditure however.

Tax credits is based on the previous year's income unless the current year's income increases/decreases by £2,500.