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Tax Credits - Gainful self-employment
Prior to April 2015
Prior to April 2015 to have your self-employed work hours count towards qualifying you for Working Tax Credit, the self-employed activity simply had to be done for payment or in expectation of payment.
From April 2015
From April 2015 the rules changed so that for self-employed hours to qualify, the self-employed activity must be done:
- On a commercial basis
- With a view to realising a profit
- In an organised and regular manner
As well as looking at the nature of the self-employed work, HMRC are also looking at the income being reported for this work. Checks will be carried out on claims where the reported income for the previous tax year is less than the National Minimum Wage multiplied by the number of hours work that have been declared on the claim.
If your income is lower than this you may be asked to provide evidence that you are in 'gainful' self-employment, meeting the requirements in the three bullet points above. By doing this, HMRC hope to identify people who are claiming tax credits to supplement self-employment that is not viable.
Even if it is decided that your self-employed hours do not count as qualiifying hours for Working Tax Credit, the income from it will still be taken into account if you are eligible to claim Child Tax Credit (or Working Tax Credit based on meeting the hours rule with other employment).
