A self employment question (well, two actually)

Discussion in 'education & employment' started by LeytonCatLady, Jun 6, 2018.

  1. LeytonCatLady

    LeytonCatLady Well-Known Member

    Evening guys.

    I will need to register as self employed soon because of my busking work. Also, I'll be flat hunting from September (I should have enough saved for a deposit and month's rent then) and will need some proof of this to show landlords.

    In February, my tenancy ended after my landlord took back the flat for his own personal use, and I wasn't able to find another place within the month he had given me as notice! Luckily, a friend came to the rescue and said he would put me up for as long as I needed, and I've been staying at his place ever since. He claims disability/housing benefit but refuses to take any money from me, though I offered. My question is, if I was to register as self employed with HMRC, would they flag this with the housing benefit office? I don't claim any benefits myself, so there's no issue there, but I don't know if it's names or addresses they link, and I don't want to end up getting my friend in trouble!

    My second question is that once I have registered as self employed, and claiming expenses, how would they reimburse you? BACS or cheque? I've searched the web but can't find any answers to this, although plenty of info about what you can and can't claim for.

    Any insight gratefully received! TIA.
  2. Puddy_Tat

    Puddy_Tat hmm

    I don't think HMRC routinely give everyone's name and address to housing benefit offices (apart from anything else, not everyone is claiming housing benefit) but there is a protocol of sharing data between government / council departments / credit reference agencies 'for prevention of fraud' so it's not certain that they wouldn't find out sooner or later so you might be potentially dropping friend in it.

    Legally, you could argue you're in the situation of temporarily staying with friend rather than being a lodger / sub-tenant (although it might be easier if you can demonstrate another address somewhere which may be difficult.)

    I'm not quite sure what the best way to go about this is.

    If HB people find out you're there, they may try to argue that you and friend are 'living together as a couple' - and want to re-assess based on your joint income / circumstances.

    Presume you and friend don't want to get in to the realms of formalising (with his landlord's permission) your status as a lodger - friend should not end up any worse off doing this, and you would be able to claim housing benefit for your rent)

    And not sure how successful you'll be with private landlords / letting agents if you're self employed and have variable earnings. Or with credit checks if you don't have a current address.

    As for tax,

    Do you have a regular (pay as you earn) job as well, or are you solely self employed?

    I did have a (fairly unspectacular) spell of being self employed but in the tax years I was, I had some regular PAYE employment as well.

    If you get in to the realms of tax returns, then you tell them what you have earned, what you have already paid in tax, what expenses you're claiming, they then work out whether you owe them money or vice versa and if so how much - and if it's the latter you can opt to have a payment via BACS or a cheque or sort it out on next year's PAYE tax code (if relevant).

    But I don't think you can end up getting expenses back if you're not earning enough to pay income tax in the first place.
  3. LeytonCatLady

    LeytonCatLady Well-Known Member

    Thanks Puddy.

    I won't risk it then - I'll register with them once I've saved up enough to start looking.

    I also do some film/TV extra work as well as the busking, so I've always got money coming in. This will at least prove to landlords I'm solvent.

    And nice to know I'll have the choice between BACS or a cheque.

    Thanks again.
  4. crossthebreeze

    crossthebreeze Well-Known Member

    When did you start busking (or doing any other self employed work). You have to register as self employed by the 5th October in your business's second tax year - so that's 5th October 2018 if you started being self employed at some point between April 6th 2017 and April 5th 2018, and 5th October 2019 if your started doing self employed work on or since 6th April this year. So you probably have some time to sort things out, you don't need to rush into it if you're worried about making things things difficult for your friend.

    You don't get expenses back, your expenses reduce your taxable amount!
    Sorry if I've misunderstood and this comes across a bit patronising.
    So you need to keep records of all the money you make from self employment - you add this up to make your business income.
    And you also need to keep records and proof of everything you spend on your business (bus fares and biros, as well as guitar strings and amps) - you add this up to make your business expenses.
    business income - business expenses = your profit or loss. This all goes on your self assessment form.
    Then your profit or loss from being self employed is added to your other taxable income (income from being employed etc) to make your total taxable amount for the year and that's the figure they use to work out your tax (first comparing it to the personal allowance, etc).
    So if you made a loss on your business, and had also been employed and so already paying tax through PAYE, HMRC might give you a tax rebate by BACS on the tax you already paid, but this would be much less than what you've paid out on expenses.
    If you made a profit on your business you may well have to pay tax on it.
    Last edited: Jun 7, 2018
    mango5 and LeytonCatLady like this.
  5. LeytonCatLady

    LeytonCatLady Well-Known Member

    Not patronising at all, Crossthebreeze. I'm new to this, so I appreciate any advice; and your explanation makes sense. :) It's nice to get advice in layman's terms actually. And yes, I started busking in September 2017, so that deadline is perfect timing which is good to know!
    crossthebreeze likes this.
  6. Puddy_Tat

    Puddy_Tat hmm

    A few other tangents that may or may not be relevant and / or may not tell you anything you don't already know -

    I'm increasingly out of touch with it all, but it sounds as though you may technically be homeless. May be worth thinking about talking to local council - chances of getting accommodation immediately are probably low, but some councils do have a deposit bond system to help people who haven't got the deposit to get in to private rentals. and may at least be aware of landlords who are willing to take on tenants who may be on housing benefit

    housing benefit is not all or nothing, and isn't only there for people who are on other DWP benefits - you can claim if you're on a low income. it's some time since I worked in that line, but at that time, the system could cope with people who had variable earnings (broadly by taking an average over X weeks and reviewing it every now and then) and I seem to remember that we did accept self declaration of earnings from a busker.

    what with the growth of casualised / zero hours work in the last decade or so, I would hope the HB people are more used to people with variable incomes now.

    likewise if you're on a low income, you may be eligible for tax credits, which are a bit of a mystery to me.

    and then there's the ongoing shambles that is universal credit that's supposed to be combining job seekers / tax credits / housing benefit in to one thing - and believe there will be a requirement to seek more / better paying work even if you're working.

    if friend has a spare bedroom then one alternative could be to regularise your position as a lodger - assuming of course friend has the sort of tenancy where this is allowed. you would be able to claim HB for your rent, the income from this would of course reduce friend's HB, although they should end up marginally better off at the end of it. There was a thread about this (albeit from the perspective of a tenant who was considering getting a lodger) not that long ago - some of it may be of use.
    Almor, equationgirl and LeytonCatLady like this.
  7. LeytonCatLady

    LeytonCatLady Well-Known Member

    Cheers Puddy.

    I should be able to save up my busking and extra money and show this combined amount to landlords without the question of housing benefit coming up. It's Universal Credit now for everyone who's single, and you can claim this as a self employed person if your earnings aren't quite enough. With both incomes, it should be OK, but I can always do this once I've moved into my next place and not need to discuss it with the landlord at all (so I haven't got DWP plastered all over my bank statements before or during the moving-in process). Not that I'm ashamed of claiming UC if I needed to, just would rather avoid awkward questions if possible.

    UC will also pay SE people (or not) based on what they're getting for the first 12 months, then after that they introduce the Minimum Income Floor (based on a minimum wage, 35 hour a week wage). That's when they start getting tough, but I should be earning over the threshold by then. And this is assuming I'll need UC in the first place.

    I wouldn't be able to claim housing benefit as a lodger at this address anyway, because my mate only has a one bedroom flat (I kip in the lounge), so that's unfortunately not an option. But it's good to know there are various things I can do. :)
  8. equationgirl

    equationgirl Respect my existence or expect my resistance

  9. LeytonCatLady

    LeytonCatLady Well-Known Member

    OK thanks Equationgirl. Busking is going OK. Me and my friend have discussed this again and he's going to declare me to the council, as he says he doesn't mind paying a non-dependant deduction on my behalf. This is mainly just to cover us in case we get any busybody neighbours reporting my comings and goings. But being legal will also mean we don't need to worry about which government departments share what information between whom.
    A380, equationgirl and crossthebreeze like this.
  10. cupid_stunt

    cupid_stunt Dyslexic King Cnut ... the Great.

    LeytonCatLady likes this.
  11. LeytonCatLady

    LeytonCatLady Well-Known Member

    I don't use letting agents anyway. Bunch of rip-off merchants! I know that's not easy nowadays, but many sites let you filter for "private" or "direct from landlord" and that's how I've found accommodation before. Thanks though.
    cupid_stunt likes this.
  12. cupid_stunt

    cupid_stunt Dyslexic King Cnut ... the Great.

    That's a good move, I've done the same, but even renting direct, a lot of landlords with still want to run a 'rent affordability' test.
    LeytonCatLady likes this.
  13. DexterTCN

    DexterTCN Official Twitter Liaison Officer

    You won't be eligible for benefits unless you are paying class 2 NIC (if you are not an employee someplace) so it may be worth registering straight away and making an arrangement to pay around £150 a year towards that. Call 0300 322 7823 to talk to someone about that after you've registered for S/E :)

    You can register for S/E at register for self assessment - Search - GOV.UK and follow the links. Any questions ask a webchat advisor or call 0300 200 3310 for a helpline advisor (8am-8pm)

    Do not* use the address of someone claiming housing benefit, use a communications address...ie I rent a house, pay full rent and council tax...use someone like me, just not someone on benefits. Systems all talk to each other now, pretty much.

    Anything else I can help with just ask.

    (*you're free to stay with anyone you like, just don't use their address)
    LeytonCatLady likes this.

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