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Thread: ESA AND Self employed work

  1. #1
    Senior Member
    Join Date
    Mar 2013

    ESA AND Self employed work

    Hello all, I'm on ESA in the SG.

    Now with my disabilities I've come to realise recently that as things stand, I'm going to need way longer on ESA. It's very complex with mental health issues and Asperger's. The problem of course is it's one big mess (when assessments restart) and I could find myself off ESA just like anyone, in the blink of an eye for reasons none of us could comprehend.

    The fact has always been I do want to work but because of a lack of support and my health problems, it's impossible for me to do any work outside the home anywhere. I've looked into self employed work at home mainly because of wanting to work, but also because if my ESA is stopped, I've then got this work to fall back on and do.

    Understandably getting to profits that are enough to live on takes time and the more I sell, the more I build up to this level.

    So here's where I'm at...

    I haven't registered with HMRC yet because I'm under the traders allowance limit as things are just a test run to make sure it's viable (it seems so).

    Firstly is the £1000 traders allowance just profit, or is it total sales?

    Regarding ESA.... £140 or so a week permitted work (I've already sent off a permitted work request years ago when I was doing online surveys). Would that £140 be classed as total sales or just profit?

    Finally, regarding tax... Is housing benefit / CT discount considered "income" ? I.e.... If I had £400 HB per month + £520 ESA + £250 profits from sales + £80 Council tax reduction = Classed as £1250 "earnings" PCM.


  2. #2
    Senior Member
    Join Date
    Mar 2014
    The trading allowance is £1,000 of business income - so that's all the money that comes into the business before any expenses are deducted. If you anticipate your turnover for the year to be more than £1000 you do need to register with HMRC. ESA is taxable in full. Housing benefit and Council tax benefit are not taxable, but any profit from your business may affect how much HB/CTB you get. For tax purposes, your income is business profit + ESA. You then deduct your personal tax allowance from that and if the result is a positive figure you will owe tax. Your tax would be paid annually after you submit your tax return so the figures (taken from your post) would be 140x52 ESA plus £250 x 12 business profit = £10, 280 income for the year. There is also NI to consider, though there is an exemption for small earnings.
    Last edited by noisynoodle; 10-10-20 at 18:56.

  3. #3
    Senior Member
    Join Date
    Mar 2013
    Wow, thanks so much. That's a really helpful response.

    Certainly it seems now the next step is registering with HMRC.

    NI seems something to forget for the time being (I think the exemption is up to £6475 profits per year).

    On that example basis of £10,280 there wouldn't be any tax to pay right?

    Apart from that, it seems all is covered. I'm going to see what CTB and HB rules are as hopefully I can find out what the threshold limits are and earn under that. Ideally I want everything to stay the same as I make some profit and build up stock levels, then go the whole hog once I have enough for it to be a totally viable business.

    Thanks again

  4. #4
    Senior Member
    Join Date
    Mar 2014
    The personal allowance before any tax has to be paid is currently £12, 500, so on the figures above you would not pay any tax. Any earned income is taken into account for Housing and Council tax benefits so these will be affected by your self-employed earnings.
    Last edited by noisynoodle; 11-10-20 at 08:09.

  5. #5
    Senior Member
    Join Date
    Mar 2013
    Thanks so much. I really appreciate it.

    Am I correct in thinking regarding HB and CT, it's amounts above "what the law says you need to live on" that affect these ? Also is it like for like (i.e £50 profit one week above this means a £50 total cut in HB/CT reduction)

    If so, then it might be better to just give up my tenancy, move back in with a family member so I can re-invest all profits and then in future a friend is looking to buy a property for me to become the tenant. So when that happens I claim HB and instead of topping up with all profits, I just pay a fraction of profits so I can keep re-investing.


  6. #6
    Senior Member
    Join Date
    Mar 2014
    The best way is to put your anticipated income into one of the online benefits calculators. That will tell you approximately how much HB and CTB you'd be entitled to. With regard to moving back with family, if you close your HB claim and later take on a new tenancy and make a new claim for HB that will trigger a move to Universal Credit.

  7. #7
    Senior Member nukecad's Avatar
    Join Date
    Jun 2014
    West Cumbria (Lake District)
    Quote Originally Posted by Careruk26 View Post
    I've already sent off a permitted work request years ago when I was doing online surveys
    Just to note that unless you have been updating the DWP each year about any Permitted Work that you are doing then you should be submitting a new PW1.

    As you probably know you are allowed to do 16 hrs a week or earn up to £140, exceeding either of those limts will stop your ESA payment.
    It should only stop payment for the week(s) in which you exceed the limit(s), but if you regularly exceed the limits then they are likely to stop ESA altogether.
    (They've even been known to, wrongly, stop it altogether just for going over for one week).

    Self employment and ESA Permitted Work can be fraught with difficuties. (Claiming any benefit while self employed can be).
    Unless you have been trading for a while then the DWP are probably going to want to see constant (monthly or even weekly) updates on what you are doing/earning to make sure that you are not exceeding the limits in any particular week.

    You might also want to take a look at the decision makers guidance for self employment in ESA:
    I don't know everything. - But I'm good at searching for, and finding, stuff.

    Migration from ESA to Universal Credit- Click here for information.

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