PRIME Initiative

PRIME has released a free and updated guide to Working Tax Credit for the coming financial year.

Working Tax Credit is a kind of reverse income tax that you should get if your household income falls below a certain level.

It is something you are entitled to as a working taxpayer and it is run as part of the tax system by the HM Revenue & Customs.

This PRIME guide explains how the scheme applies to self-employed people over the age of 50. Despite the bad press Working Tax Credit often receives, PRIME believes that for the self-employed it can be a valuable lifeline, so it’s worth checking out this brief guide to see if it might be useful to you.

Working Tax Credit - a brief guide for self-employed people aged over 50

This year we have also explained the basics of Child Tax Credit, as an increasing number of people over 50 have responsibility for looking after children - about a quarter of those contacting PRIME according to other research we will be publishing soon. Thanks to everybody for filling in the forms.

The guide provides examples for the tax year starting on the 6th April 2007 and ending the 5th of April 2008. The numbers for the current tax year 2006 to 2007 are similar but you get slightly less money.

Otherwise details of the scheme haven’t change significantly. The welcome hike in the “income disregard” introduced this year will continue into FY 2007-2008, which will mean far fewer people facing hassles and demands to return overpayments if their circumstances change.

Fears on this point discouraged many from claiming, which is a pity as Working Tax Credit (and Child Tax Credit) can help out with your basic living expenses if your business is going through a bad patch. Working Tax Credit is also very useful for those new to self-employment whose businesses are not yet making much money.

There is no universal grant for starting a new business in the UK. Working Tax Credit is as close as the system here gets to encouraging small business start ups. So it would be silly to ignore it if you qualify.

UPDATE

We’ve updated the links above to point to the print-ready version of the guide produced immediately after the 22 March 2007 Budget. This incorporates some minor changes on the Childcare element of Working Tax Credit.

If find the text too small you may prefer the original A4 text version