Starting a business

LokiLoo

I live with my husband and 2 children, I'm a stay at home carer for one of our children who is disabled. My husband has a full-time job but we receive Child Tax Credit, Child Benefit, Carers Allowance and DLA for our child. My husband wants to start a business or do something on the side that would involve him creating and selling his services. How does this work with the benefits? His income would vary all the time, some months with more, some next to nothing. Would I need to contact the benefits department every month to tell them what he's earned?
Also, how does he go about registering himself or that he's earning more money on the side once he starts? Does he pay tax and if so, how? Sorry if these are silly questions but we're fairly clueless and don't know anything about being self-employed. Thanks

MovingForwards

Can't say about benefits.

HMRC have lots of useful information about starting up as a sole trader. There's also a small business section on this forum with lots of useful information.

calcotti

Carer’s Allowance and DLA are not affected.
Child Benefit is only affected if his total relevant income goes over £50,000 in which case the higher income tax charge comes into play.
Tax Credits are affected by annual income. If the income by the end of the year is more than £2500 different from the income figure used to calculate the payments made during the year there will have been a Tax Credit overpayment or underpayment. You only need to ask for a revised award during the year if you think this might happen.

LokiLoo

Thanks both, super helpful! 

LokiLoo

calcotti said:

Carer’s Allowance and DLA are not affected.
Child Benefit is only affected if his total relevant income goes over £50,000 in which case the higher income tax charge comes into play.
Tax Credits are affected by annual income. If the income by the end of the year is more than £2500 different from the income figure used to calculate the payments made during the year there will have been a Tax Credit overpayment or underpayment. You only need to ask for a revised award during the year if you think this might happen.

Thanks for all this. Do you know how the tax credits will be affected? Let's say he made £3000 in a year, would they deduct £3000 from our annual tax credit award or just £500 off the annual award because it's only £500 more than the £2500 you mentioned? 
Thanks

calcotti

LokiLoo said:

calcotti said:

Carer’s Allowance and DLA are not affected.
Child Benefit is only affected if his total relevant income goes over £50,000 in which case the higher income tax charge comes into play.
Tax Credits are affected by annual income. If the income by the end of the year is more than £2500 different from the income figure used to calculate the payments made during the year there will have been a Tax Credit overpayment or underpayment. You only need to ask for a revised award during the year if you think this might happen.

Thanks for all this. Do you know how the tax credits will be affected? Let's say he made £3000 in a year, would they deduct £3000 from our annual tax credit award or just £500 off the annual award because it's only £500 more than the £2500 you mentioned? 
Thanks

That’s not how Tax Credits are calculated Use a benefits calculator and try inputting different numbers.

https://www.gov.uk/benefits-calculators