Tax credits, housing benefit and self employed

[tonyvid]

Hi all, I'm asking this on behalf of someone so bare with me if I don't know all the details!

They currently work 16-18hours pw and receive child tax credits(also something that involves nursary payments), housing benefit and whatever else you might get in the +16hrs rules. They earn just below the annual tax threshold.

This job might be changing and they may have to look at going self employed in a similar job but maybe 24hrs pw. Are you still eligible for the above credits and support as, say, a sole trader? How do you prove hours worked - billing evidence? It seems dealing with DWP is hard enough as an employee let alone something else!

If this is not an option, how do you be low hours self-employed and still get support?

I know the PH answer would be to work all hours and not get state support but that can't be for everyone

[Countdown]

If you are self employed you can get TC and HB even if you are working full time.. The amount you get depends on how much profit you declare.

[Stevanos]

You have to pay tax credits back once you make money either through self employment or going back in to PAYE with an employer

[tonyvid]

Thanks guys, I'll pass this on

[Eric Mc]

Tax Credits are a real bind for the self employed because, being self employed, they are taxed on their "trading profits", not what they pick up each week. Therefore, they simply don't know what their assessable income is on a day to day basis. They usually have to wait until AFTER the end of their accounting year (or the tax year in some cases) before they finally can work out what their taxable profits actually were.

Therefore, to claim Tax Credits, they have to ESTIMATE their income levels DURING the relevant tax credit year and then notify HMRC what their TRUE profits were months later - and pay back any excess tax credits they may have received.

[tonyvid]

Thanks Eric, I have wondered how that worked.