I know that it is not exactly bookkeeping topic but I believe that you can help me, friends.
So, my best friend (she is self employed) in previous tax year 2010/2011 worked about 20 hours per week. Now, from February 2011 is still at home because of pregnancy. She doesnt have any income but she is still registered as self employed and pays national insurance. how many hours she should write down in 'Your usually number of working hours' in claim form ? In my opinion it should be 20. what do you think ?
I started writing a long winded answer about the differnece between employment and self employment but after having a glance at the HMRC website I think that pretty much says it all.
Where I was going with my self employment discussion was that you are working for your own business regardless as to the hours that you charge a client. Therefore, take the example that you work on client sites for 20 hours per week and get £20 per hour. That's £400 per week. But, you might pay yourself say £8 per hour for 30 hours per week that includes working off site and maintaining the business (payroll, admin, etc.).
Also this irons out situations where you work on a project for several months and only get paid intermitently. Perhaps monthly or quarterly.
The key factor here is that you are working more than the prescribed hours and being paid for them by your business even though your business is only paid after three months.
The HMRC website specifically states that Working Tax Credit is for people who are employed or self-employed (either on their own or in a partnership), who
* usually work 16 hours or more a week * are paid for that work, and * expect to work for at least 4 weeks
For your freind you are also going to need to factor in the 39 week rule (see the above link).
hope that this at least points you in the right direction.
good luck,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
