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Offalldegaul
Rank; Hector Tax Inspector
United Kingdom
4 Posts |
 Posted - 22/01/2009 : 14:54:06
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Hello everyone I do not expect anyone to be able to answer this just looking to get out of a crisis and in the right direction. Please skip to the third paragraph first if you don't like introductions/waffle. Newbie here, first can I just say how sorry I am to hear of all these travesties and that the whole tax credit system is still unbelievably up and running. After reading many contributions on this forum all I can feel is numbness and impending doom at what I may be about to venture into. Is this man stupid, I hear you cry?
Maybe I am stupid but I am also growing desperate and anxious. I am a single bloke living alone with no dependents or savings (left) and have been signing on JSA since July. In that time I have received 3 replies to job applications of which 2 offered me an interview and 1 was an apparently close decision, the other (DWP) am still waiting to hear from them as to why I was unsuccessful, they wouldn't tell me over the phone.
I am now faced with a dilemma; go to my GP and end up back on the sick through stress (having virtually no money to live off and the problems that brings etc) OR go self employed and possibly end up paying back more than I have been given.
I have recent experience as a research assistant with a little work possible and maybe a little more plus be able to try some of the money making ideas on sites like money magpie et al which is currently a bit tricky on a £5 per week threshold. Trouble is I know I would have to claim wtc's to make this second option viable and after searching through other sites including the government's, I am little wiser as to amounts I am entitled to and other important information. In fact the best advice I have read, I found on this very forum. However, I am still very much in the dark.
So apologies for long winded intro but can anyone tell me if this is a feasible venture with no initial work/earnings/profit guaranteed or direct me to the best point of advice, PLEASE? As I understand it, I would be classed as freelance and based at my current home. With minimal even zero earnings/profit, how much could I expect to be entitled to in credits?
Many thanks in advance.
I am skint, therefore, I am not.
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missfroy2
Rank; Captain Gordon
236 Posts |
Posted - 22/01/2009 : 19:26:55
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Tax credits have obviously received lots of bad press and criticism after multiple problems since they started. This has put a lot of people off claiming, however if your circumstances are such that you need tax credits then there really isn't a choice.
There is no reason to presume that you are going to have a nightmare time of it, and despite everything I have seen I wouldn't encourage anyone not to claim.
There are some things you can do to reduce the risk that anything goes wrong:
1. Send everything recorded delivery and make notes of all calls with the tax credit office including the date, time, name of adviser and what was discussed.
2. Keep a copy of your original claim form and get someone to check it over.
3. When you receive every award notice, check every detail against the checklist within 30 days of receiving it. Telephone HMRC with any errors and follow it up in writing.
4. If you notice anything odd, don't be worried to ask someone for help.
One of the problems you will face as self employed will be estimating income. Not so much of a problem with the disregard (you can earn £25,000 more compared to previous year income without it immediately affecting tax credits) but this comes with some warnings. You only get the disregard for one year, and if you estimate too low and your income turns out to be higher you will have an overpayment.
The other problem you might face is meeting the hours requirement. You have to be in qualifying remunerative work for 16hrs/30hrs (depending on your circumstances) and so if there are long gaps in your work you might not meet the requirements. For self employed you can count all manner of things - time spent doing books, advertising, marketing etc.....
Before you embark on this, speak to your adviser at JC+ and then go and get some secondary advice from CAB or similar.
MF2 |
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Offalldegaul
Rank; Hector Tax Inspector
United Kingdom
4 Posts |
Posted - 23/01/2009 : 11:21:18
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Hi MF2, thanks for your reply. That all sounds like good common sense and the precautionary aspects back up much of what I have read from AliMW (apologies for any spelling mistakes) on another thread.
I never seem to get the complete picture from the JC and am one of those who believes the whole wtc's fiasco may be by design and should be scrapped and replaced by a simpler, more efficient system and/or better wages.
Still I know which direction I would rather be going in or wouldn't have wasted time in thinking or posting this thread.
There is a six month review coming up at the JC within the next fortnight when I shall be asking some questions or enquiring who exactly to speak to (maybe a proper business advisor but I don't have any money to pay for one) and in the meantime I am going to book an appointment with my DEA as he was very supportive in my application to the DWP and seemed to know everything about wtc's for those in regular employment.
One thing which is needed but is lacking is fora on the government website, this in itself could create some jobs and help reduce appointment waiting times at the JC but most importantly give people much needed information.
Once I know I can meet 30 hours and have a better idea of estimated income; costs; profit; tax returns together with the amount I am entitled to in wtc's then I shall know if it is feasible to pay my rent, bills and shopping. I feel very frustrated at the moment but do feel another step closer so thanks again and I look forward to any more advice you or anyone else may have.
Offalldegaul
I am skint, therefore, I am not. |
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Alan the Geordie
Da Purple one
2787 Posts |
Posted - 23/01/2009 : 13:10:13
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Hi Offalldegaul
A link for you to explore; http://www.inbiz.co.uk/
"The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible
reductions. In this way the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed."
Adolf Hitler |
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Offalldegaul
Rank; Hector Tax Inspector
United Kingdom
4 Posts |
Posted - 23/01/2009 : 18:13:28
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Hi Alan..., thanks for the link, looks helpful.
"The freedom which consists in being one's own master, and the freedom which consists in not being prevented from choosing as I do by other men, may, on the face of it, seem concepts at no great logical distance from each other - no more than negative and positive ways of saying much the same thing. Yet the 'positive' and 'negative' notions of freedom historically developed in divergent directions not always by logically reputable steps, until, in the end, they came into direct conflict with each other."
[Isaiah Berlin]
>>I AM SKINT, THEREFORE, I AM NOT.<< |
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missfroy2
Rank; Captain Gordon
236 Posts |
Posted - 24/01/2009 : 10:41:54
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One other thing to remember is that tax credits will initially be paid on your previous year income.
So, if you are coming off Job centre benefits, your previous year income is likely to be fairly low. You will be paid on this income initially.
At the end of the tax year, tax credits will 'finalise' your award. All payments through the year are provisional. During finalisation they compare what you actually earnt in the tax year just ended with your previous year income.
Unless there is a rise of more than £25,000 between the two, it will be finalised on the much lower previous year income.
Now some people are given a false sense of security with this disregard. Even though it might not immediately impact on your tax credits, it is crucial to let HMRC know your estimated income as soon as possible and before the start of the next tax year. This is because you only benefit from the disregard initially.
An example might better explain:
Say you start in employment in April 2009 (2009-2010 tax year). Your tax credits will be initially provisionally paid based on your 2007-2008 income. This income, if you are on job centre plus benefits is likely to be nil or very low.
You will receive these payments throughout the tax year. Once the tax year ends in April 2010, HMRC will send you renewal papers asking for your actual 2009-2010 income. As you have gone into work it is likely to be higher than 2007-2008.
Providing it is not more than £25,000 more, you will have received the correct amount during 2009-2010.
However, here is the problem. HMRC don't send the renewal papers out until May following the end of the tax year. So in this case May 2010. The deadline to return them is July 31st. So what happens between April 2010 and July 2010?
HMRC continue to pay you at the same level as the previous year and using the same income figures. However your 2010-2011 tax credits are initially based on your 2009-2010 income - much higher than 2007-2008. That is why it is imperative that you tell HMRC of your estimated 2009-2010 income before the end of the 2009-2010 tax year. this will mean that HMRC can set more realistic payments at the start of the 2010-2011 tax year and you reduce your chances of an overpayment.
Many people who move from JC+ benefits budget based on tax credits they get in the first year when they move into work. They get a nasty shock in YR2 when tax credits drop significantly. This is because of the fact that tax credits are based on previous year income (providing not more than 25k difference with current year). Obviously the year they are on benefits means they get a large tax credit award the following year, but the year after tax credits will be based on the year they were in work and therefore fall rapidly.
TC are very complicated, and so sorry if this doesn't make sense. But it is important to go into this knowing what happens. JC+ tend to give you figures for tax credits when you enter work, but not necessarily the following year after that.
Good luck with your business
MF2 |
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Alan the Geordie
Da Purple one
2787 Posts |
Posted - 24/01/2009 : 12:08:29
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Miss Froy
Thank you for that excellent post!
Very informative & useful as I too am in the process of returning to Self-Employment.
I was Self-Employed for 20+ years before things "went wrong" & I ended-up with an alleged Tax Credits overpayment, divorced & caring for my Mum.
That's all in the past now, I won my case & HMRC admitted their mistakes & here I am ready to start all over again, but this time I'm determined NOT to have anything to do with Tax Credits. They are - as you say - "very complicated" & to my simple Geordie mind just not worth the risk.
"The best way to take control over a people and control them utterly is to take a little of their freedom at a time, to erode rights by a thousand tiny and almost imperceptible
reductions. In this way the people will not see those rights and freedoms being removed until past the point at which these changes cannot be reversed."
Adolf Hitler |
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Offalldegaul
Rank; Hector Tax Inspector
United Kingdom
4 Posts |
Posted - 26/01/2009 : 18:20:06
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Hi again MF2, no need to be sorry at all, I already knew it was complicated and you have merely given me quite a lot of what I asked for!
I have spoken with my DEA this afternoon. The main thing I want to know now is about limits to wtc's. I have somehow got it into my head that there is a limit to just under £2,000 per year for wtc's. This was the main question I built up to then the advisor said I should speak to the Inland Revenue about the amounts - see what I mean about getting the full picture? Anyhow I have a 6 month review coming up very shortly and have been doing my own appraisal.
I have still not heard anything about the Work Trials and mentioned it again today only to be told by the DEA that he cannot discuss it with me until I have had the review - as they may be able to help me then. If there is anyway that being freelance will initially bring in the same amount to live off as I get on JSA it will be worth having a go as, the way I look at it I might as well be contributing to society than sat on my arris applying for jobs I rarely hear back from.
Of course I now have the extra information above from yourself about different tax years and I already agree this is vital. I am just wondering how many people are sat here like me thinking it would be much more encouraging to get into work was there a less complicated and controversial tax system in place. I really could and should have been working by now and they can't say I aren't keen based on the enquiries I have made.
Anyway, I'd better leave it there as I am digressing from the main purpose of the site.
Feeling much more optimistic about the whole thing.
Thanks again,
Offalldegaul
>>I AM SKINT, THEREFORE, I AM NOT.<< |
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whitevanwoman
Rank; Hector Tax Inspector
United Kingdom
65 Posts |
Posted - 27/01/2009 : 01:26:00
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If you have a DEA, then you may qualify for the disability element of working tax credit which means that you have to work between 16 and 30 hrs to qualify (otherwise you would have to work a minimum of 30 hrs to qualify) and you may qualify for a disability premium of WTC.
I registered as self-emp in Nov and am in the process of preparing my business plan and making contacts etc for my business. I do not expect to be up and running before the end of the tax year and have told TC that I expect to generate zero income from the business until then. I have registered as working 15 hrs per week self-employed (I also have a 6hr week job) so my total working hours are 21 for WTC purposes. My WTC is based on my income from my 6 hr/week job. I get DLA and therefore qualify for the disability premium of WTC. Just to be on the safe side, I keep careful records of exactly how much time I put into my self-emp business (doing business plan, website, producing leaflets etc, talking to people, meeting business advisors, keeping financial records of expenses, sorting out my stock, etc) so that I can prove that I have genuinely put 16 hrs a week into developing my business despite not gaining an income from it should WTC query why I've not declared any income from the business.
If you have a local Disability Alliance welfare benefits advisor (have a look at the Disability Alliance website) they may be able to give you some help with regards to disability benefits entitlements. I found their advisor much more knowledgeable and helpful than the DEA at the job centre. Good luck, hope it all works out for you.
Instructions for life:
1.breathe in
2.breathe out
3.repeat ad infinitum
"Realise that if you have time to whine and complain about something then you have the time to do something about it" (Anthony d'Angelo) |
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tcblondie
Rank; Hector Tax Inspector
7 Posts |
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worth going self empld if needing to claim wtc's?
