Self employment

[kerry davies]

Just a heads up for those claiming Working Tax Credits, from The Guardian

 

The important para is the final one;

Meanwhile, welfare minister Lord Freud this month dealt a blow to the self-employed by claiming new demands could be placed on them from the introduction of the universal tax credit. He pointed out that as it stands the tax credit system allowed people to pursue hobbies, earn nothing and subsidise their income through state support "without any expectation that they will increase their earnings and move towards self-sufficiency. This flies in the face of a principled welfare system"

That makes a noise very much like the thin end of wedges do, if I recall correctly.

[themadhippy]

But of course its perfectly ok for large multinationals to pay the minimum possible to there staff,who then have to have their income supplemented by tax credits

[Oldradiohand]

Where does "pursuing your hobby" start and volunteering your time for the "big society" end? Anyway, I like self employment. I pay the government a small fee, they give me national insurance credits and they don't ask me to get a job.

[harrison110]

Where does "pursuing your hobby" start and volunteering your time for the "big society" end?

 

Isn't there already a system whereby charities can say "this person is volunteering for us"?

[cfmonk]

Where does "pursuing your hobby" start and volunteering your time for the "big society" end?

 

Isn't there already a system whereby charities can say "this person is volunteering for us"?

 

Only if you request a reference from them...

 

My hobby is volunteering for St John Ambulance. I love a weekend away driving about in the snow in the North East answering 999 calls which I would consider "big society contribution" so you're right, there is no clear line...

[paulears]

HMRC have always had a 'hobby' income category that usually meant they didn't wish to get involved, but my accountant tells me that increasingly, she's getting new clients who sell on ebay, and HMRC have decided they no longer have hobby status. If your hobby makes money, then I suspect they won't for much longer view it as a hobby. Most hobbies cost you money, so maybe that's the new decider?

[Stuart91]

she's getting new clients who sell on ebay, and HMRC have decided they no longer have hobby status. If your hobby makes money, then I suspect they won't for much longer view it as a hobby.

 

I'd imagine that selling on eBay is viewed differently from other "hobbies".

 

For someone who plays in a band, and makes enough money to keep themselves in instruments and get a little beer money on top, you could argue that they have engaged in an enjoyable activity, and the surplus cash is almost an unintended by-product.

 

I don't think anybody trades on eBay for the enjoyment. Nobody would be selling on the site if they didn't think it would make them money. Seems like a reasonably easy line for HMRC to draw.

[Nicktaylor]

"keep themselves in instruments and get a little beer money on top" Is this someone working elsewhere? Otherwise how do they live?

[kerry davies]

It is declarable income, just like her indoors and her artwork. She used to sell her paintings and pay tax on the profit even though she is a "hobbyist". It is part-time "work".

 

The point with this topic was to alert any BR members who now claim Working Tax Credit that come October they are highly likely to lose it. For other self employed members who do not claim working benefits of any kind then there is no problem.

 

Johnny Void as usual has his own jaundiced take on it.

[Grum]

So what about me selling my used motorbike parts on ebay?

 

I can't claim tax relief when I buy them as "apparently" motorcycling isn't a business. Will I have to declare the money I get when I sell the used parts I've added to the bike during the time I've owned it?

 

Just curious.

 

I guess the bonus is that if they decide it is declarable income then I can start getting tax relief on the bikes when I buy them.

[Brian]

So what about me selling my used motorbike parts on ebay?

Selling personal possessions is outside the scope of tax.

[Grum]

Selling personal possessions is outside the scope of tax.

 

Understood but it's a potential fine line between that and some part time ebay sellers, especially when the exhaust system can fetch £5,000 2nd hand. I have had issues in the past either because of the value or the number of items

[kerry davies]

Thread necrophilia but there has been some small clarification in a good article; HERE!

The DWP has a more detailed site; HERE!

 

I have my own interpretation but some have said that unless a small trader can show a minimal level of profitability, currently £11K plus a year, they will not be allowed to register as self-employed and if they do will be subject to monthly HMRC reporting.

 

If the fears are realised it does actually have an impact on all self-employed workers since all might just end up subject to RTI.

[paulears]

Hang on - I've never heard of this, and was told I was not, as a self-employed person, entitled to any benefits because I generate income - and would never have 6 weeks clear of any work. So this reads that if you earn more than £11K you can get benefits, but to encourage you to do better, you mustn't earn less than the pro-rata amount in any period? So your benefits, unlike all other people out of work, go up, if you do paid work, and go down if your income drops. I'll never understand our Government!

[kerry davies]

Whoever told you that was wrong Paul. Try this for size.

 

Under Universal Credit you will be able claim the equivalent but if you earn less than £11,300 pa, 35 hours a week at NMW, then they will strip you of self employment registration and insist you seek work that will pay that amount. If you do earn that sum then they will calculate how much more you are entitled to and pay that amount. However to do this they will demand monthly statements of earnings and expenses rather than the current annual return to HMRC.

 

This is allegedly simplifying the system so you are right to believe they are bonkers. So far Universal Credit has had four chief officers, one gave up and moved job, one died suddenly after 4 months in post at 56 years of age and one has had a total nervous breakdown and retired hurt.

 

“I’m not going to give you anything other than the official line. I’m not mental.” Graham Mowat from the DWP Universal Credit directorate.

Oh dear!