HM Revenue and Customs Brief 7/15 - new rules for the self-employed claiming Working Tax Credit
Submit Articles Back to Articles
From April to get Working Tax Credit (WTC) self-employed
people will need to meet new criteria. This brief provides further
details on these changes.
2. Who needs to read
claimants or advisers who support claimants.
3. The changes
From 6 April 2015, all new claimants who are using
self-employed work to meet the qualifying remunerative work test for WTC, must show that
they are trading on a commercial basis and their business is done with
a view to achieving profits. The self-employment should also be
structured, regular and ongoing.
For example, if their business activity is a hobby it is not
likely to be considered commercial or have an expectation of realising
These checks are about ensuring HM Revenue and Customs (HMRC) only pay
tax credits to those who are entitled. WTC will continue to
support those who are carrying on a genuine business activity. These
changes will not affect the rules for claiming Child Tax Credit.
4. How the changes will
claimants with earnings below a threshold (this will be based on
working hours and the National Minimum Wage) will be asked by HMRC to provide
evidence that they are in a regular and organised trade, profession or
vocation on a commercial basis and with a view to achieving a profit.
The information we ask for should be available as part of
normal business activity, for example receipts and expenses, records of
sales and purchases. We may also ask for supporting documents such as a
business plan, planned work, cash flow and profit projections.
During the early stages of self-employment it may prove
difficult to make a profit. If someone in this situation claims WTC they may be
asked to show that they have a commercial approach and how their
business would become profitable. This could be demonstrated in a
will use the information provided to reach a decision about the
claimants’ current WTC
Claimants may lose their WTC
if they cannot provide the evidence we ask for and may have to repay
any tax credits they are not entitled to.
Claimants who disagree with our decision can ask for us to
look at the decision again.
5. Further information
All claimants affected will receive information from HMRC about the
new rules and the action they need to take before any awards are
Further detailed guidance will be available on GOV.UK from 6
About the Author
© Crown Copyright 2015.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2015-06-03 11:10:15 in Tax Articles