self employed income support and tax credits

gcparks2000

Im self employed and can claim the income support but my wife currently gets tax credits and we have been told to stay on tax credit rather than change to universal credit. So if i clain the income support will it effect my wifes tax credits and my working tax credits.

Jeremy535897

Tax credits depend on a couple's income, and the grant is self employed income for these purposes, so it could affect tax credits.

whizzywoo

The Grant might or might not affect how much taxable profit you make in the tax year ended 5th April 2021.  The grant will have to be included in your self employed income for that year.  Depending on how much work you manage to do during the rest of the tax year and how big the business overheads are you might make more or less taxable profit than you did in the year ended 5th April 2020. 

You will be filling in the Tax Credits renewal for the 2020 tax year any time now.  This time next year you will be completing the Tax Credits renewal for the 2021 tax year.  The difference between the two will affect Tax Credits either up or down.

Basically it depends on how badly your business does in the next 12 months.  But if you get back to self-employment fairly quickly and are doing well you need to be careful that you are not getting too much in Tax Credits and building up a large overpayment which will need to be repaid.

gcparks2000

my main concern is that its switches us from tax credits to universal credit. Does anyone know if that would happen ?

calcotti

gcparks2000 said:

my main concern is that its switches us from tax credits to universal credit. Does anyone know if that would happen ?

It will not.

Jeremy535897

It shouldn't, but if your tax credit claim reduced to zero (unlikely) as a result of the grant, you should make sure you keep your tax credit claim open. Perhaps someone with more experience of the mechanics could comment?

whizzywoo

If your tax credit claim ever reduced to zero it still remains open.  Indefinitely I think, I seem to remember getting the claim form for 10 years or longer after our claim was nil.  It wasn't until I actually asked them to stop it that it was closed.

Jeremy535897

I think they may sometimes write and ask if a claimant wants to close a claim, after it ha been nil for a little while, but that was some years ago.