If you or your partner are working as a sole trader, as a member of a trading partnership or as a share fisherman then you will be considered to be a self-employed earner. You will also be classed as self-employed if you are paying class two National Insurance Contributions.
To claim Housing and/or Council Tax Benefit you must complete the combined Housing Benefit and Council Tax Benefit claim form.
You must complete all sections of the claim form where necessary and provide all documentary evidence as requested in the claim form, or any other additional information that we may request from you. Failure to do so may result in your claim being withdrawn or in a loss of benefit.
Making A Claim
You must complete the combined Housing Benefit and Council Tax Benefit claim form.
This form can be obtained from any Aberdeenshire Council benefit office.
You must complete all sections of the claim form where necessary and provide all documentary evidence as requested in the claim form or any other additional information that we may request from you.
Failure to do so may result in your claim being withdrawn or it may result in a loss of benefit.
What if I am unable to provide a profit and loss account?
You may be unable to provide us with a profit and loss account if:
- you have recently become self-employed
- your profit and loss account is not yet available from your accountant
- you do not employ an accountant
In this case you will be asked to complete a self-employed earnings enquiry form. This form asks for information about your business and about your business income and expenses.
What if I have just started up in business?
You may not have enough accounts or enough business records to allow us to work out your average weekly earnings.
In this case your likely level of earnings will be estimated until you are able to provide the required information.
I am a Childminder - how will my income be calculated?
If you are a childminder then there are no allowable expenses.
One third of your earnings from childminding will be taken into account when calculating your entitlement to Housing Benefit and / or Council Tax Benefit.
Calculating the Payments
I have submitted my application form and provided the Benefits Section with all the necessary evidence and information, how are my self-employed earnings calculated?
Firstly, your gross profit will be calculated.
In doing so we will not make any deductions for the following amounts in your business records or accounts:
- Money you spend on new equipment to set up or expand your business or any repayment of capital which is part of a loan taken out for business purposes, unless it is for the repair of an asset or the replacement of equipment or machinery
- The depreciation of any capital asset
- Any expenses that are not totally for the use of the business
- Any expense incurred in providing business entertainment
- Any losses suffered before your income is calculated for Housing Benefit and/or Council Tax Benefit purposes
Secondly, your net profit is calculated by making the following deductions where applicable from your gross profit to give the net profit for the business.
Please note these are only examples and are not an exhaustive list:
- Purchases of stock for resale
- Business loan interest (not the actual repayment amount)
Wages paid to your partner/staff including National Insurance contributions - Total loan or hire purchase repayments for replacement items only
- The cost of a repair of an existing asset of the business that is not covered by an insurance policy
- Vehicle running expenses, including fuel, road tax, insurance, cleaning and repairs. Unless you specify that the figure you provide for vehicle expenses is purely a business expense then we will assume a split of 20% for personal use and 80% for business use
- Telephone expenses. Unless you specify that the figure you provide for telephone expenses is purely a business expense then we will assume a split of 50% for personal use and 50% for business use
- If you are not in a business partnership, any salary or wage, not including drawings, you or any of your business partners received, as well as or instead of a share in the profits, including National Insurance contributions
- Any VAT that you have paid in excess of the VAT you received
In order to calculate your net earnings the following will then be deducted from your pre-tax profit:
- A calculation of Income Tax for which you are liable using tax allowances for the current year at the time of assessment
- A calculation of National Insurance contributions for which you are liable
- Half of any contributions you make to an occupational or personal pension scheme
What Next
When your net profit for benefit purposes has been assessed this figure will be used to calculate your entitlement to Housing Benefit and/or Council Tax Benefit for a future benefit period.
We may ask you to meet with us to discuss your self-employed accounts.
Outcome of Claim
How will I know if I have qualified?
When your claim and all relevant supporting documentation and information has been received your claim will be processed.
You will be issued with a notification letter confirming details of the calculation and whether or not you have qualified for Housing Benefit and/or Council Tax Benefit.
W hat if I think the decision is wrong or I am unsure about the decision?
You should notify us immediately if you require clarification or if you think the decision is wrong.
You should call or write to the Benefit Section who made the decision.
When will my entitlement be reviewed?
If you are self-employed your review will take place on or around the date which coincides with the time that your next set of profit and loss accounts are due to be completed.
It is important that your profit and loss account is prepared immediately after your trading year ends in order that your benefit can be reassessed promptly.
Change of Circumstances
It is important that all claimants report all changes of income or personal circumstances that may affect their benefit entitlement.
Two examples of relevant changes that a self-employed earner should notify the Council of are:
- The securing or loss of a contract resulting in a significant increase or decrease in income
- A change to the number of partners in the business
If in doubt you should always notify a change to ensure that you are receiving the correct amount of benefit and to prevent an overpayment.
