£20 disregard for income support when self-employed? (Lone Parent)

Elle00

Does anyone know where I would stand regarding the £20pw earnings disregard whilst claiming Income Support as a self-employed lone parent?

I'd like to set up as a freelance typist and computer tutor as there seems to be a gap in the local market for one. I believe I would only stand to earn around £10 - £15pw in the early months.

A friend of mine has to live off an absolute pittance because she is self-employed and doesn't receive child maintenance so she has about £20 a week earnings in place of £59 a week IS. I'm not clear if this is because she is self-employed or because her net income (before expenditure like insurance and travel) is greater than the IS amount.

Currently I have £129pw to live on for myself and my child. If I had to come off IS and pay Class 2 National Insurance, I'd have £114pw to live on for the two of us. If I was able to keep my IS, I wouldn't have to pay NI contributions either and we would have £139pw to live on - a considerable difference.

rachnbri

I'm not entirely sure what your question is as you seem to already know the answer! But yes you can earn £20/week without your IS being affected as long as you are working for under 16 hours. Anything over £20 will be deducted from your IS, so for example, if you were earning £25/week thay would deduct £5 from your IS. You need to let them know if you're doing any part time work even if it's under £20.

Elle00

rachnbri wrote: »

I'm not entirely sure what your question is as you seem to already know the answer! But yes you can earn £20/week without your IS being affected as long as you are working for under 16 hours. Anything over £20 will be deducted from your IS, so for example, if you were earning £25/week thay would deduct £5 from your IS. You need to let them know if you're doing any part time work even if it's under £20.

My question is whether or not being self-employed rather than employed by an employer has an affect on the £20pw disregard. If it makes no difference I would be okay to go ahead and not declare anything and register as self-employed until my earnings had reached £20pw (making me £10pw better off than at present and £25pw better off than if self-employed without an IS top-up).

The reason I'm questioning whether or not it is different is because my self-employed friend is not entitled to IS even though it means she has to live below the poverty line just because she wants to work 2hrs a week!

It concerns me that different rules appear to apply to the self-employed rather than employed. Obviously the last thing I want to do is commit benefit fraud but equally I don't want to register as self-employed too prematurely if it means being worse-off financially.

lil_me

You need to declare it all, even if you earn 1p. What they deduct is a different matter but ALL earnings must be declared.

Self employment, form is on http://www.jobcentreplus.gov.uk/JCP/Customers/WorkingAgeBenefits/Incomesupport/index.html
basic rules and info on http://www.jobcentreplus.gov.uk/JCP/Partners/Allowancesandbenefits/Dev_010101.xml.html

rachnbri

You would be treated the same whether you're employed or self employed, but you do need to declare your earnings even if they're under £20.

Elle00

So declare it to the JC and register as self-employed, fill out the form, and pray to god I don't get the same JC advisor my friend did then?

Scarlett1

Elle83 wrote: »

So declare it to the JC and register as self-employed, fill out the form, and pray to god I don't get the same JC advisor my friend did then?

I doubt its anything to do with the JCP staff more like your friend has income coming in that is over the IS rate, sounds like her gross wage goes over the limit, if she has only £20 per week to live on then that means she has overheads of around £50, she can check she is getting her full entitlement by looking at

www.entitledto.co.uk

Becles

Elle83 wrote: »

If it makes no difference I would be okay to go ahead and not declare anything and register as self-employed until my earnings had reached £20pw (making me £10pw better off than at present and £25pw better off than if self-employed without an IS top-up).

Be careful!

If you start work as self employed, you must declare it to HMRC within 3 months of starting the self employed work. This applies regardless of your actual earnings from it.

If you don't you could be liable for fines for not telling them. People have reported in the mystery shopping thread that they have been fined £100 for registering late. Also you to register for Small Earnings Exemption Certificate to cover your NI. You need to cancel this if your earnings go above £4500 per year, or if you want to start paying the NI stamp, so you are entitled to other benefits like Incapacity and Maternity Allowance in case you need them in the future.