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Daughter has registered a small business. What does she need to tell DWP? Will she be reassessed?

starbuck

I wrote a couple of weeks ago about our daughter selling her hobby items.
She has decided to register as a small business as her total sales have gone over the £1000 limit.
What does she need to tell the DWP now about this? I'm guessing the new bank account for the business but what else?
Will this lead to reassessment? That's what scares me as she only makes the items - I'm dealing with all the paperwork and selling at the moment as her health is still not good.

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janer1967

Hi there

Informing dwp won't trigger a new assessment but she can be reassessed at anytime like everyone else

Dwp will only be interested on the earnings and how this affects her payments

Ziadawn

Hi there, If she is on ESA she cannot earn more than £140 a week or it will effect her benefit. Look on the gov.uk site, and read the part about permitted work. I am thinking of selling on Etsy but I would need to sell below the limit to keep my benefit.

calcotti

Ziadawn said:

Hi there, If she is on ESA she cannot earn more than £140 a week or it will effect her benefit.

Permitted work earnings limit is now £143/week
https://www.gov.uk/government/publications/employment-and-support-allowance-permitted-work-form/permitted-work-factsheet

starbuck

We've had a look at the permitted work form and it asks how much she will be earning. We have no idea at the moment as like Ziadawn she will be selling on etsy and earnings will vary widely.

Ziadawn

I just intend to sell to the limit each week, then put out of stock until the next week.

Ziadawn

I think you may have to go on universal credit, I seem to remember it saying you could work and still claim. But you need to speak to them to know for sure.

calcotti

Ziadawn said:

I think you may have to go on universal credit, I seem to remember it saying you could work and still claim. But you need to speak to them to know for sure.

Can be on ESA and work within permitted work limits. Earnings will not reduce the ESA payable.
There are no work limits for UC claimants but earnings will be taken into account and may reduce the UC payable (subject to certain disregards).

chiarieds

Hi @starbuck - I remember you mentioning this earlier. I presume your daughter has let HMRC know that she's registered as a sole trader as she earned more than £1000 from self employment in the last financial year? Hoping 'sales' have not been confused with earnings.There's a lot of difference between the 2, as I'm sure you know. Your daughter should keep simple book keeping, itemising her sales & expenditure (cost of materials, & P&P for example) to work out her profit, i.e. earnings. She will have to file a tax return each year, but an accountant's costs, should she consider this, are not dire. When we had a second hand bookshop a few years ago the costs were about £70 per annum based on my accounts.

Just to add, as mentioned above, if she earns (makes a profit) of over £143 per week then this will affect her ESA.

starbuck

Yes she's just registered as hmrc count the £1000 limit on total sales. She has earned nowhere near this as most of her work sells abroad so it is made up of mostly postage costs.

starbuck

I still can't understand what to put on the permitted work form as it seems to be geared towards having an employer.
What should we put down where it asks how much she will be earning? Would it be ok to write "less than £143 a week".

Ziadawn

I also find the information they give you confusing too. I think you need to chat to them because Etsy logs your sales, and its a business.

chiarieds

Whatever Etsy do, there's a world of difference between sales & profit, i.e. your earnings, which I've previously mentioned to @starbuck I think to say, 'less than £143 a week' would strike me as dodgy. Has your daughter kept a simple 'sales' & 'expenditure' account? If so, I would base her 'sales' less 'expenditure' accounts which shows her profits/earnings over x number of weeks by explanation. She doesn't have to go onto Universal Credit, & it's unfortunate that she registered as a business as it doesn't appear she earned/made a profit of over a £1000 in the last financial year. HMRC only need you to register a business if it's made over £1000 profit, not sales. Please see the following for confirmation: https://www.gov.uk/set-up-sole-trader

Ziadawn

I used to own a small independent bookshop as a sole trader. I think they will demand to see proof of her earnings. I think as soon as she filled the form in as a sole trader they will try and take the esa away. But I don't want to be all gloom and doom about it.

Ziadawn

Etsy regards a certain amount as a business, and they have to give their customers business information to hmrc.

chiarieds

Almost a small co-incidence there @Ziadawn - my husband & I had a small secondhand bookshop, which our son later took over, so nearly 25 years as a family business. I don't know if a conversation with HMRC might help, as the poster's daughter registered as a sole trader within the first few weeks of this financial year, & without trading in the past financial year from what I've read.

Ziadawn

Hi there,

Its worth a try guys.

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