Employed + Self Employed + UC

Kayalana99

calcotti wrote: »

My understanding is
In the month you earn £100, UC will deduct £63 from the amount payable. When you pay your tax bill that counts as an expense in that assessment period. For self employed people who are subject to MIF it makes sense to pay tax in instalments because otherwise paying it in one go may the thing that brings them below the MIF and they then lose out through having it applied.

Yea that makes sense to pay monthly if you can. Loving this extract from the link :eek:

According to DWP guidance (Chapter H4123), the income tax that can be deducted is the actual amount paid to HMRC in the UC assessment period in respect of the trade, profession or vocation. This is based on a strict reading of the Regulations means that only tax due on income from that particular trade, profession or vocation can be deducted. In practice this will be impossible to calculate for claimants who have more than one source of income that is dealt with through self-assessment without further guidance from DWP.

&& seems the capital invested would be 'lost' on UC terms.

Repayment of capital in relation to a loan taken out for the purposes of the trade, profession or vocation

Can't make it easy can they. I suppose they would rather people be employed if claiming UC but in my situation so people don't take advantage.

calcotti

DWP guidance is here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787442/admh4.pdf

NedS

Kayalana99 wrote: »

According to DWP guidance (Chapter H4123), the income tax that can be deducted is the actual amount paid to HMRC in the UC assessment period in respect of the trade, profession or vocation. This is based on a strict reading of the Regulations means that only tax due on income from that particular trade, profession or vocation can be deducted. In practice this will be impossible to calculate for claimants who have more than one source of income that is dealt with through self-assessment without further guidance from DWP.

Quite simply, if you are self employed, when you report your income and expenses at the end of the AP, you would report any income tax you have paid in that AP relating to your self employment as an expense. You can have more than one source of self employment, but for UC purposes you just lump them all together. So "self employment" can be one business or many businesses that you are involved with.

What you would not report is any income tax paid in regular PAYE employment

NedS

Kayalana99 wrote: »

It's a shame I still feel a bit clueless about this expenses....as it feels like you guys are saying if I spend 4k in one month - this doesn't get counted in month 2 if I have 800 income come in.

If you report a loss in the first month because your outgoings are more than your incomings, then this loss is carried forward to following months and offset against the next month (and future months if required) income. So if you report a £4K loss in month one, and then £800 income in subsequent months, then the next 5 months earnings will be offset and it's only in month 6 that earnings will be taken into account (assuming you are not gainfully self employed with an imposed MIF).

Self employed losses are NOT offset against employed earnings, so these will still count in full in the normal way.

Kayalana99

Thanks all. I do think due to the nature of the work clients will not be against paying monthly DD either towards the end cost. So I could do this as standard which might make it easier to work out from a UC POV.

Appreciate all the help.