You’ve made the decision to become self-employed. You’ve registered with HMRC and have got a business plan. Things started off well, but your income starts to drop, and for some it dries up.
What can you claim?
There is lots of information about current tax credits and benefits being replaced by Universal Tax credit, so lets look at what they are replacing and how it works
Benefits to be replaced by Universal tax credit
• Child Tax Credit.
• Income Support.
• Housing Benefit.
• Working Tax Credit.
• Income-based Jobseeker’s Allowance.
• Income related Employment and Support Allowance.
Dependant on where you live will dictate what system you currently fall under. If you already claim and are self employed, then you do not need to do anything. The Department for Work and Pensions (DWP) will tell you when you are moving over to universal credit. You will also be exempt from the minimum floor income for the first six months of the changeover, (see below for further info)
If you are a new claimant, your post code will dictate whether you claim the above or the new “all in one” benefit of Universal Credit’s but in order to claim Universal Credits you will need to prove you are gainfully self- employed
To do this you will need to provide at a gateway interview evidence of : –
• Your Business Plan
• Copies of invoices, (proof of income)
• Your trading accounts for previous years
• Receipts for expenses
Therefore it is essential you keep all your documents and bank statements. These can be kept electronically. Here at Blue Skies, we encourage all our clients to keep as much as they can electronically, as it not only makes it easier to access but also makes it more environmentally friendly.
Once you start to claim Universal you will need to report to HMRC your self-employed income, this also applies to company directors. You need to report the income you receive before the monthly assessment period, any time up to 7 days before your assessment date or 14 days after. BE AWARE:-if you fail to do so your payments will be stopped
What you need to let HMRC know
• How much your business has received (your gross income)
• How much you have spent on Business expenses
• How much tax and national insurance you have paid if relevant
• If you have paid any money into a pension.