Working Tax Credits for a self-employed start-up

[gladiol]

Hello, I am a single and childless person who wants to set up an online business as a sole trader. I have never been a sole trader before, so I currently have no Unique Tax Reference. I want to register as a sole trader with my local HMRC within next several days.

 

However, although I will be working for 50-60 hours per week on my online business from the very beginning, it will take no less than six months before I can start earning any income.

 

So, by 05/04/2013 (i.e. for the Tax Year 2012-2013), I will have a zero income from my self employment (and £7,781.06 of gross income from my previous employment that I quit in September 2012). Moreover, even from 06/04/2013 (the starting date of Tax Year 2013-2014) it will take several more months before I can start making any self-employment earnings.

 

Now, the Law says that the Working Tax Credits can be granted only to someone, who does some “qualifying and remunerative work”, which means - in the case of self employed people - any work that is (or is expected to be) for payment or profit.

 

In my case, will the quite considerable, circa 6 months’ period between setting up my business and first earnings not make any problems? Will I not be told by the HMRC something like “show your income first and only then we will be paying you any Working Tax Credits”? Or will my Working Tax Credit application or entitlement not be investigated, after I show my zero self employment income for the Tax Year 2012-2013 after 05/04/2013?

 

The bottom line: will it not be more practical for me to sacrifice any Working Tax Credits until the end of Tax Year 2012-2013, and apply for the Working Tax Credits only after 05/04/2013 instead?

 

Thank you in advance for your practical advice, experience or opinion.

[scotgal68]

HMRC will ask you for accounts, details of income/expenditure/invoices etc. I think they can make an assessment by assuming income and making a provisional award, they would then ask you to confirm your income at the new tax year, when you apply you would just leave the part income from s/e blank (as you haven't earned yet)

[gladiol]

Thank you, scotgal68, for your help.

[jadeybags]

I'm in the same situation, although I have teens in education, but no, profit doesn't seem to be something they are interested in apart from to set your tax credits rate.

I gave them the figure of 100 per week, that's all they wanted to know. And also wanted the unique reference number once I got it.

I have a friend on line that does the same work, yet she has been earning zero profit for probably a couple of years now. She's lucky in that she based all benefits on zero profit so gets full amounts of benefits. I can only assume she buys A LOT of materials....