Self employment, tax credits and illness...

meyore

Hi I'm hoping someone will have some advice or information for me regarding my mother's current situation. For the past year she has been working self employed for 16 hours a week. She has been receiving working tax credit and child tax credit for my 18 year old sister, who is about to finish her exams. I know that means that her child tax credits are going to stop, but does that also mean the working tax credits will stop as she doesn't work enough hours? And if my sister is to stay in further education (not uni, she has failed her exams ), even though she is about to turn 19, will my mum be able to keep claiming.

Also, she has just been given a 2 month sick note by the doctor as she is quite unwell, but is unwilling to use it as she thinks it will stop all her money. Is she entitled to any benefits with this sick note and who would she give it to even if she is? She is afraid to ring anyone in case they try and force her into something.

Thanks for reading, hope someone can help me to help her

Conor_3

Yes, if she doesn't do 16 hours, she doesn't qualify for WTC. The CTC will stop and your sister would have to claim benefits in her own right as an adult.

Regarding the sick note, I'm with your mother on this. Being self employed, she'd only be able to claim Incapacity Benefit and then she loses the WTC. One of the joys of being self employed though is that nobody can actually prove you don't work the hours you say. She could put down she works over 30 hours to get the higher rate of WTC even if she doesn't make a profit and they have to prove she doesn't. She can include all the time spent looking for work, doing her accounts etc as well as travel to clients in that 30 hours.

[Deleted User]

Sorry Conor this isn't totally correct it is a bit different with self employment to regular PAYE employment.

If you are self employed and become ill you should be able to claim Incapacity Benefit for up to 28 weeks and STILL be classed as working for WTC purposes.

On top of this you wouldnt need to include the 28 weeks of IB as declared income to TCO.

[Deleted User]

Also, if your sister stays in non-advanced full time education your mum can still claim for her until she turns 20.

meyore

Thanks taking the time to reply

Its all very complicated really, I'm sure it'll be me who ends up filling in the tax credit forms again! If my sister stays in education does my mum need to carry on with 16 hours a week, or does it need to be 30 yet?

Also, who does she go to for the incapacity benefit?

[Deleted User]

If your sister stays in full time education your mum only needs to work 16 hours.

Trying going to the local Jobcentre Plus for Incapacity Benefit (I think this is correct, someone will tell you if it isn't).

sebastianj

Hello Conor, I know a web designer who was self-employed, he spent most of his time looking for work and made only £1000 that year. He was expected to be supported through the tax credits but was told that his earnings did not constitute working 30+hrs and he did not receive a single penny.
Is this right, it has been a year or so now can he confront them again?
rgd
seb

sebastianj

No takers of the last question then??
rgd
seb

Contains_Mild_Peril

I'm really not sure how one would appeal over something like that or whether it would do any good, but it's generally accepted even by HMRC that new businesses often don't make much money in the first year. If a self-employed person were to claim that they were working hard but earning peanuts for several years I'd expect that to be questioned, but if the low earnings are just for one year then they should accept that. It could be a problem trying to claim retrospectively though, since he might be asked to produce proof of the work he'd done. I also wouldn't hold my breath: the TCO aren't noted for their efficiency.
Thanks for the warning though: I should probably start keeping records of the hours I work just in case it's queried.

[Deleted User]

If you are self employed you should keep records of what you are doing in order to try to find more work.
You will still be classed as working if actively seeking new clients and trying to promote your business.
It is very easy to register as self employed and sit around doing nothing, all the while claiming WORKING tax credits and claiming a £0 or very small profit.
Your friend could have been investigated by compliance who have decided he wasnt doing enough to constitute working 30 hours p/w - the minimum number of hours that needs to be worked to claim WTC.

Conor_3

sebastianj wrote: »

Hello Conor, I know a web designer who was self-employed, he spent most of his time looking for work and made only £1000 that year. He was expected to be supported through the tax credits but was told that his earnings did not constitute working 30+hrs and he did not receive a single penny.
Is this right, it has been a year or so now can he confront them again?
rgd
seb

Well his business mileage and phone bills should support the hours he was doing however a lot depends on what his turnover was and what his expenses were. If he had next to no expenses, he'd have a hard time convincing anyone because if he was out doing sales visits, he should have £1000's in business mileage expenses. For example, if he made £1k profit on £8k turnover, they're likely to believe him but if he made £1k profit on £2k turnover, he's going to have a hard time.