If I stop working and I lose my Working Tax Credits...will I get more Child Tax Credits instead?

Question

I am still technically working for a Market Research Company but at the moment they have no hours for me as in this economy who can afford this service?? Anyway I need to tell HMRC asap but I want to know whats going to happen...will I get more Child Tax Credits instead or not??
My partner and I are already on our second argument about this so please please help because he is freaking out!

Also I am thinking of starting my own business in the near future and I would be classed at Self-Employed so would I some how be better off like this as that's what he seems to think....

Please if anyone can help I would be forever grateful!!

Answer 1

First part about your Tax Credits. Your Child Tax Credits are capped once your earn £24k between you. If you currently earn more than that as a couple the amount of CTC you get has been reduced from the maximum (max is around £58 1 child or £100 2 children). If you currently earn less than that between you they will not increase your CTC to compensate for loss in earnings.



If your partner works less than 24hrs a week and you leave work your Working Tax Credits will stop.



If you recieve Housing Benefit and your full rent isn't currently covered and your income drops they will increase your Housing Benefit If you don't recieve that at the moment and rent, once your earnings drop put in a claim and see if you are entitled to that and Council Tax Benefit to compensate for some of the lossi n earnings.



No matter what happens you will not have as much income not working as you do working however if you currently have no income from work anyway you will be better off notifying HMRC.



Regarding self-employment. Create a business plan from an online template and work out what your projected earnings will be for this tax year Apr 2012 to Apr 2013. If possible you'll find it easier to start self-employment on 6th April 2013a nd run your accounts in line with the Tax Year. Also work out how many hours you will be spending doing work (including accounts etc) each week. If you jointly work >24hrs you will recieve help with Chlidcare costs and WTC.



Honestly, if you are self-employed you will be better off, but only if you know what you are doing and can do your own accounts. They're fairly easy, I do mine on an Excel Spreadsheet. For the first year my earnings from self-employment were negative (i.e. I made anofficial loss) so I claimed back £200 income tax I paid in my last employment. You can offest quite a lot of expenses against tax so generall, yes you will be better off and can claim working tax credits as well.

Answer 2

If you are self employed, and your business is operating at a loss (most do in at least the first year, due to all the expenses) then you will get maximum working tax credits and child tax credits. You will be payed more tax credits if you work over 32 hours per week, regardless of how much you are earning. You will also be entitled to housing benefit, depending on how much your partner earns. If you are thinking of starting a business from home, have a look on www.getyourfree100now.co.uk for some ideas, they offer free advice about the legit online money earners and the dodgy ones. Good luck.

Answer 3

It's a bad situation and it won't be sorted until the tax structure is changed again at the next budget which is f-all use to you at the moment! The only way out would be if there was any chance your wife's employer could increase her hours to 24 per week so she can still claim tax credits? From what you've said this isn't an option. Sadly, you guys would be better off financially if you were both unemployed until this stupid anomaly is fixed next year. My advice - find a way for your wife to get sacked from work!!!