SolvedTCM0126220 | Eligibility - remunerative work (general): Self-employed earners (Info)
From HM Revenue & Customs · Tax Credits Manual
The qualifying remunerative work condition applies to self-employed earners in the same way as to employed earners.
A self-employed earner’s expectation of payment must be a reasonable one. The customer must confirm that the work is done in expectation of payment. It doesn’t matter that the self-employed earner might trade at a loss.
Hours counted for self-employment
The hours that may be counted as being spent in work by a self-employed earner include
those that will be costed to the client as spent in providing the individual order or service
those spent in activities necessary to the employment.
Examples are
trips to wholesalers and retailers
visits to potential clients
time spent on advertising or canvassing
cleaning the business premises
cleaning a vehicle used as part of the business - for example, a taxi or a driving school car
bookkeeping
research work - for example, where the person is an established author.
Self-employed seasonal workers
Where the person is a self-employed seasonal worker, you must establish whether a recognisable cycle of work exists. If the business continues to operate throughout the year, it will usually be a year.
You should include in the calculations, time spent on all activities connected with the business - for example, taking bookings in winter months, maintenance of property.
You should then average the hours over the cycle excluding the period when no work is done - for example, holidays.
Self-employed new starter
A self-employed new starter is a person who
becomes a self-employed earner
or
increased their self-employed hours to 16 or more weekly.
If the person is a self-employed new starter, calculate the hours worked based on the average number of hours the person expects to work in a week.
Allowance paid to assist in running a new business
A person may be in receipt of an allowance payable under certain schemes to assist them to become self-employed. This allowance used to be called a Business Start Up Scheme. This name no longer applies and schemes are likely to have local names.
An allowance paid to assist a person to become self-employed isn’t payment for work, although such an allowance should still be treated as a gross receipt where it’s received.