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Working tax credits

 
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sas401



Joined: 01 Jul 2016
Posts: 25
Location: Wales

PostPosted: Fri Sep 29, 2017 12:31 pm    Post subject: Working tax credits Reply with quote

I have been letting out our holiday cottage for nearly 2 years now. Realised a few weeks ago I should be claiming working tax credits while income is low in first few years so submitted application. Five weeks on, I got a snotty phonecall from someone in the WTC section. Basically she had made her mind up that renting one cottage did not substitute as a business and therefore she just classed it as an extra income (therefore not eligible for WTC). She was quite persistant that despite me stating that I did at minimum 18 hrs a week with cleaning, advertising, general grounds maintainence, she reckoned none of that consituted "running" a business.
Now I have had a wonderfully long form arrive basically wanting to every last detail, several weeks work just getting all they need together. Is this right?
Has anyone else had the same experience?
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anya752000



Joined: 06 Mar 2013
Posts: 465
Location: Pembrokeshire

PostPosted: Sun Oct 01, 2017 11:44 am    Post subject: Reply with quote

I know they have tightened up on working tax credits for self-employed people. If you run your own business you will be asked to provide lots of information so they can decide that you are running a profitable business (or aiming to be profitable) and it is not a hobby (their word not mine!)
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kyreniagirl



Joined: 05 Jan 2010
Posts: 2342

PostPosted: Sun Oct 01, 2017 2:38 pm    Post subject: Reply with quote

Do you pay Business rates?
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zebedee



Joined: 12 Sep 2014
Posts: 825
Location: yorkshire dales

PostPosted: Sun Oct 01, 2017 3:00 pm    Post subject: Reply with quote

Hopefully someone who is an accountant will respond to this thread and put right if I am saying the wrong thing.

I use an accountant now, but unless something has dramatically changed, on your tax return, the income and expenditure from your holiday let is classed as "unearned income".

This means that you get no credit for any time that you spend on advertising, liaising with guests etc. You cannot take a fee for this.
If you do your own maintenance, you can claim for parts etc but not for your time. If you use a contractor to do the same repair, you can claim the amount of his bill.

I'm not sure about the changeover labour costs, but would imagine the same rule applies. I have never taken a payment for any changeover that I have done, or any additional cleaning. I would expect my accountant to tell me if I can claim this.

I don't necessarily think this is fair, but that is my understanding of the tax rules. On the other side, we do get to offset costs so for example, you can claim something towards your computer, office space etc but be careful about the amount you claim for your own house as it can make you liable to capital gains tax when you sell it.

Be careful with WTC, I know someone who was overpaid by WTC as a result of an error by WTC staff. They let it go at first, as it was their mistake, but a couple of years later my friend was forced to repay the amount and threatened with legal action if she did not co- operate.
Edited to add: apologies, I have just been told it was child tax credit this story related to, not WTC.

I would take advice from the CItizens Advice Bureau or an accountaant who deals regularly with holiday lets before you begin to tackle the form as you may be wasting your time.
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sas401



Joined: 01 Jul 2016
Posts: 25
Location: Wales

PostPosted: Mon Oct 02, 2017 3:23 pm    Post subject: Reply with quote

Looks like I will have to ring citizens advice first and see what they say. It is a ridiculous amount of information they need and I can see it taking me weeks.
I dont pay business rates due to there being small business rate relief. I am hoping the fact that I have a letter from the welsh office stating this that it will sway them as it does seem ludicrous that we would be letting the cottage out if it wasnt run as a business. It may not be the most profitable making business but it is better than it being empty!
Thanks for your help Smile
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