On ESA WRAG - Wondering about self employment

[deathbycrayons]

I've been on ESA since January after being migrated from IB. I have M.E. and mental health issues. Working for an employer isn't an option for me. I've been self employed before when I was younger and know what it entails. I make cards and jewellery and am considering becoming self employed again, even though I know I won't make very much money. What I need to know is:

 

When I come off ESA, will I be eligible to have my earnings be topped up with income support? What will happen to tax credits?

 

I have a son who is disabled, and he gets DLA middle rate care, and my husband gets carers allowance for him. Will this be affected? Also child tax credits, how will these be affected?

 

I am receiving DLA lower care and lower mobility, I understand these won't be affected.

 

We rent our house and receive housing benefit - will be still be able to claim housing benefit if I am self employed? Do we need to register the business and if so I wonder if this will affect our tenancy (private).

 

Thanks in advance

[Nystagmite]

In order to claim income support, (your husbands' carers allowance would be grounds for claim) you have to work under 24 hours a week and earn under a certain amount per week. Carer allowance is counted as income. The 24 hours apply if the claim is in your husbands name.

 

Your husbands carers allowance won't be affected. Unless he went into business with you and earnt more than £100 a week.

 

Child tax credits (you might be able to claim working tax credits too) and housing benefits are based on your income. If you claim working tax credits, they'll be too high to claim income support too. As someone receiving DLA, you only need to work 16 hours a week and can claim the disability premium of working tax credits.

[estellyn]

You can commence self employment under the permitted work scheme (as long as the work you do isn't something that the descriptors you scored on says you can't do).

 

Here is a factsheet:

 

http://www.disabilityrightsuk.org/f35.htm

 

as long as you are within the permitted work scheme, any income is disregarded for other benefits.

 

Once you are working and earning enough to come off the permitted work scheme you should be able to claim working tax credits.

[deathbycrayons]

Thank you I've just read through our tenancy agreement and it says that we're not to use the premises for any trading or business whatsoever - but I wouldn't actually trading from the property, I'd be selling my wares in local shops. So I'm not sure where this leaves me..

[deathbycrayons]

Can anybody clarify this for me?

[deathbycrayons]

Bump..

[jadeybags]

I've been on ESA since January after being migrated from IB. I have M.E. and mental health issues. Working for an employer isn't an option for me. I've been self employed before when I was younger and know what it entails. I make cards and jewellery and am considering becoming self employed again, even though I know I won't make very much money. What I need to know is:

 

When I come off ESA, will I be eligible to have my earnings be topped up with income support? What will happen to tax credits?

 

I have a son who is disabled, and he gets DLA middle rate care, and my husband gets carers allowance for him. Will this be affected? Also child tax credits, how will these be affected?

 

I am receiving DLA lower care and lower mobility, I understand these won't be affected.

 

We rent our house and receive housing benefit - will be still be able to claim housing benefit if I am self employed? Do we need to register the business and if so I wonder if this will affect our tenancy (private).

Thanks in advance

 

Personally I can't help with the rest but these points..yes you can claim housing benefit when self employed, you need to have an estimate of what your profits will be when you first claim.

Yes you need to register self employed. You can do it all online on the HMRC website.

I rent from housing association, doing similar to what you want to do, & it doesn't affect your tenancy.

[estellyn]

You need to register your business with HMRC. Not sure anout the tenancy issue, if you're not seeing clients or selling in your house I don't see it makes a difference. My husband is self employed and works at home on the computer all day - we haven't told the landlord, and quite frankly, as long as they get their rent each month, they don't care about much - haven't even inspected the property in three years.

[jadeybags]

You need to register your business with HMRC. Not sure anout the tenancy issue, if you're not seeing clients or selling in your house I don't see it makes a difference. My husband is self employed and works at home on the computer all day - we haven't told the landlord, and quite frankly, as long as they get their rent each month, they don't care about much - haven't even inspected the property in three years.

 

I rented a house like that, they were even paying a letting agent to over see it, but they never once visited!

Pretty sure if you're only using one room in your home for business, it's all hunky dorey. Another lady I know that uses more than one room did need a visit from the council for some reason. But should be fine for one room.

My housing association even started running self employed classes at the begining of the year, how to register, sort your tax returns etc, no idea why. I nearly went along but didn't bother in the end.

[Simon7685]

Also I have read a number of cases where people with disabilities have done this and HMRC review their working tax credit entitlement if their profits show that they are not earning at least the minimum wage. They are not supposed to as minimum wage does not apply to self employed but they are doing it. When Universal Credit comes in anyone self employed will be classed as earning the minimum wage for benefit calculations, this hasn't been 100% cast in stone yet but it will be because it has been suggested.

 

So if you claim WTC and claim you are working the minimum 16 hours that disabled qualify under you need to make a profit of 16x6.19=99.04 a week or 5150.08 per year. If you dont they are stopping peoples entitlement. Under UC it is suggested that your income from self employment will be calculated using these figures whether or not you actually earn that much, so it lessens the amount of benefit you are entitled to in tax credits.

 

They want people to work but now they are telling you what you must earn. This is not fair on anyone, never mind those with disabilities trying to give themselves a bit of dignity and feel worthwhile in society.

[jadeybags]

Also I have read a number of cases where people with disabilities have done this and HMRC review their working tax credit entitlement if their profits show that they are not earning at least the minimum wage. They are not supposed to as minimum wage does not apply to self employed but they are doing it. When Universal Credit comes in anyone self employed will be classed as earning the minimum wage for benefit calculations, this hasn't been 100% cast in stone yet but it will be because it has been suggested.

 

So if you claim WTC and claim you are working the minimum 16 hours that disabled qualify under you need to make a profit of 16x6.19=99.04 a week or 5150.08 per year. If you dont they are stopping peoples entitlement. Under UC it is suggested that your income from self employment will be calculated using these figures whether or not you actually earn that much, so it lessens the amount of benefit you are entitled to in tax credits.

 

They want people to work but now they are telling you what you must earn. This is not fair on anyone, never mind those with disabilities trying to give themselves a bit of dignity and feel worthwhile in society.

 

 

Not everything that is suggested ends up happening....

[Simon7685]

No it isn't that is quite true but the White Paper has already stated;

 

For Universal Credit we are considering introducing a floor of assumed income from self employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported."

 

It has been well reported that this transfers into the self employed will be treated as earning the minimum wage and this will be used for the calculation of tax credits, housing and council tax benefits. I am not in agreement with this myself but sadly it is still 99% certain it will happen. Sadly a lot of people have used becoming self employed as a loophole to claim maximum tax credits while not actually operating a proper business and then claiming they don't earn any profit or little profit year after year.

 

 

[Nystagmite]

I'm sure I've read people on here having issues with HMRC, WTC and minimum wage. The thing is, when you work 16 hours self employed, you're doing things like advertising, sorting out a website, accounts, etc. and not actually seeing clients or doing work for someone.

[Simon7685]

I couldn't agree more, I think it is wrong that they are doing this and a lot of genuine s/e people are suffering as a result.

[Nystagmite]

Which means you're going to many s/e people packing in their business and going on to benefits.

[estellyn]

Which means you're going to many s/e people packing in their business and going on to benefits.

 

Indeed! My husband is self employed but earns nowhere near minimum wage. Come UC, he will have to give up self employment and just be a carer (he gets carer's allowance for me).

[jadeybags]

Yep, I shall be giving it up too, because I don't earn minimum wage out of my self employment. So there we have it, 2 people just in this thread. The unemployment figures are going to be looking good aren't they lol

Tbh that's the only reason I think there's a chance it wont happen.

I think it should happen if people are making zero profit all year & claiming full tax credits, but they wont like the unemployed figures taking the nose dive that will be inevitable. So.....

 

Just worked mine out, about £3.30 an hour I make in profit. That's based on £100 for 30 hours. For the next 2 yrs I could drop to 16 hours on paper I guess, (I work at least 40 hours to get that £100 a week because I enjoy it) but once daughter leaves school something will have to give anyway.

[Simon7685]

There is a thought I have had about this situation, no doubt it is full of pitfalls and danger because it basically means telling porkies, so I don't know if it's doable. (Is that even a word?)

 

At present HMRC are taking people to task to provide s/e details regarding income and profit. If you don't earn the minimum wage, you risk being told they are taking your WTC away and I know some people who have had to pay back a lot of money. One I have read about has to pay back over £6000, which gets paid back out of her benefits because she isn't earning from her business anymore.

 

What is there to stop you inflating your takings to make it look like you earn at least the minimum wage. I know it is illegal but how can it be proven if you put down you have taken more money than you have? If you reduce your hours to 16, which is enough hours if you are disabled then that would be worth £100 a week in wages. You would get full WTC (less the £790 30 hour element), full HB & CTB and not pay tax because it is well below the tax free allowance.

 

I realise it can't be as simple as that and it does involve being rather naughty to say the least but if you are earning the minimum wage, the chances of any HMRC check are minimal anyway. So what is to stop people doing it?

[jadeybags]

There is a thought I have had about this situation, no doubt it is full of pitfalls and danger because it basically means telling porkies, so I don't know if it's doable. (Is that even a word?)

 

At present HMRC are taking people to task to provide s/e details regarding income and profit. If you don't earn the minimum wage, you risk being told they are taking your WTC away and I know some people who have had to pay back a lot of money. One I have read about has to pay back over £6000, which gets paid back out of her benefits because she isn't earning from her business anymore.

 

What is there to stop you inflating your takings to make it look like you earn at least the minimum wage. I know it is illegal but how can it be proven if you put down you have taken more money than you have? If you reduce your hours to 16, which is enough hours if you are disabled then that would be worth £100 a week in wages. You would get full WTC (less the £790 30 hour element), full HB & CTB and not pay tax because it is well below the tax free allowance.

 

I realise it can't be as simple as that and it does involve being rather naughty to say the least but if you are earning the minimum wage, the chances of any HMRC check are minimal anyway. So what is to stop people doing it?

 

You can't really put down that you have earnt more than you have as people like me that sell on line, have the evidence right there. I don't ever worry about proving I am working the hours I am down for, the things I make actually look like they should take longer lol & that's before taking into account photo taking, advertising time & post office trips/accounts etc.

The only worry is, since I became self employed in April I have only earnt £100 per week in the last month. Even though tax credits & housing benefit are based on me earning £100 per week & have been since april. The last thing I want is to be paid too much housing benefit though, been there done that bought the t shirt! So I prefer to be under paid. I only have to pay £26 per week towards my rent anyway. I can deal with that. It wouldn't be worth me having them pay more. My LA have not followed up on my estimate of £100 per week when I first claimed, even though they asked for my first months accounts, & I earn't about £75 per week. And also even though I asked a couple of months ago, I still haven't got my accounts back which I need for my tax return eventually!!

I think it's safe to say my LA are pretty pants from my experiences lol

[Simon7685]

I never thought about the online bit but take the point. I just think it is a crying shame when people who are trying their best to scratch a living and in doing so contributing to society, they get screwed over. We all know that minimum wage rarely happens for the self employed, especially in the early years of a business. It is especially hard for people with disabilities, self employment for people in this position is very common and very often this is the only way they can work. At least if you're s/e you can fit in what you can, when you can, you can't do that with an employer.

 

I have no doubt that this in an enormous faux par by the Government and completely against their beliefs of entrepenuerial spirit to boot, that as you say will result in more people being unemployed.

[jadeybags]

I never thought about the online bit but take the point. I just think it is a crying shame when people who are trying their best to scratch a living and in doing so contributing to society, they get screwed over. We all know that minimum wage rarely happens for the self employed, especially in the early years of a business. It is especially hard for people with disabilities, self employment for people in this position is very common and very often this is the only way they can work. At least if you're s/e you can fit in what you can, when you can, you can't do that with an employer.

 

I have no doubt that this in an enormous faux par by the Government and completely against their beliefs of entrepenuerial spirit to boot, that as you say will result in more people being unemployed.

 

It's going to be epic. I know of one lady doing what I do, & she makes NO profit at all, & hasn't done for the year she's been self employed now. Pretty sure she buys a lot more supplies than she probably has to if you know what I mean! So she needs to sort that out! But even so, she'll be no better off than me so we'll both be on benefits for a while.

I'm a bit stuck between a rock & hard place, my son is in 6th form, some days goes in at 10am, comes home at 1pm, some days 9am til 1.30pm, sometimes only there an hour etc etc, it varies everyday. He can't get a bus to school. So it's only me to get him there & back.

I could work nights, but when do I sleep in the day then?

At the moment this works round 2 kids in school. I'm lucky that by the time the changes come in you're talking about, my 2 will probably have left school. Phew!