Working Tax Credits and the Self Employed

To be entitled to tax credits you must be in ‘qualifying remunerative work’. There is no restriction on claiming Working Tax Credits if you are self-employed. This could be a valuable source of additional income to those who are un-employed and considering a return to work in a self-employed capacity, and not earning a great deal in the early stages of their new business venture.

When it comes to tax credits you will need to inform the tax credit office about any change in your circumstances. When you’re starting up in your new business you probably won’t be earning a huge amount but still be working more than the 16 hours a week you need to be working to get Working Tax Credits.

Under the Working Tax Credit (Entitlement and Maximum Rates) Regulations 2002, the number of hours which a self-employed person is in qualifying remunerative work is defined as ‘the number of hours he normally performs for payment or in expectation of payment’.

The government states that you could get Working Tax Credit if:

You are aged from 16 to 24 and have a child or a qualifying disability

You are 25 or over, with or without children

You must:

– work a certain number of hours a week

– get paid for the work you do (or expect to)

– have an income below a certain level

The basic amount of Working Tax Credit is up to £1,940 a year – you could get more (or less) depending on your circumstances and income.

There is a useful calculator to check your potential entitlements on the government website here

Also you can get help directly from the tax credits helpline on 0845 300 3900

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