If you are Self Employed and on a low income you may be entitled to Housing and Council Tax Benefit. In order for us to determine if you are eligible for either of the above (or both) we will need to look at your net weekly income from your Self Employed earnings and any other income and capital that you may have.
What evidence we will require to determine your net Self Employed Earnings?
In order to support your application for Housing and Council Tax Benefit we request that you provide your last six months income and expenditure accounts for your business. These do not have to be audited by a professional accountant but should show all of your weekly/monthly income and expenses.
If you have only just become Self Employed we will require a 13 week forecast of your projected earnings and expenditure. We will then review your claim after this period to ensure that the income we are using for you is correct and that you are receiving the right amount of benefit.
If you have not kept records of your Self Employed accounts you should complete a 'Self Employed' proforma and provide this in support of your application for benefit. However, it is advised that for future purposes that you keep weekly/monthly records of your income and expenditure as this will be required to assess any future benefit entitlement. You may also be required to provide these in support of your Income Tax returns.
How is your Self Employed Income assessed?
We need to calculate your net profit from your total income. We calculate this as follows:
Gross Income - Allowable Expenses = Pre-tax profit
From this figure we then deduct any amount you would be expected to pay in tax and national insurance, and half of any amount you pay towards your pension. This gives a net profit figure. This is not necessarily the same figure used by HM Revenues and Customs, as not all of your business expenses are allowable for Housing and Council Tax Benefit purposes.
What are 'allowable' business expenses?
Allowable expenses are 'expenses' that we consider to be reasonable and incurred wholly for the day-to-day running costs of the business.
Examples of allowable expenses include:
- rent and water rates for business premises only;
- gas, electricity and other fuel costs on the business premises;
- telephone charges (not including any amount for personal use);
- advertising costs;
- postage and stationary;
- legal and accountancy fees;
- buying stock and materials;
- motor/travel expenses (not including any amount for personal use).
There are certain expenses that HM Revenues and Customs will allow that cannot be included as an 'allowable' expense when assessing your Housing and Council Tax Benefit. These include:
- Capital expenditure;
- Business entertainment.
Self Employed Child Minders
If you are a Self Employed child-minder we do not deduct business expenses. We arrive at your net profit by deducting tax, national insurance and half of any pension contributions from one third of your gross income. This figure is then used to determine any entitlement to Housing and/or Council Tax Benefit.
If you would like any further assistance regarding issues surrounding your entitlement to Housing and Council Tax Benefit as a Self Employed person please telephone 01246 242436 or submit an enquiry form
Last Updated on Monday, 20 December 2010 15:04