Working Tax Credit puzzle...
... and 30-hour-a-week compliance blitz?
OUR HEAD hurts. We've been reading around the government”quot;s proposals for a new &ldqio;Universal Credit”quot; to replace the dole (sorry, we mean “Jobseeker's Allowance”quot;), the social (“Income Support”quot;) Working Tax Credit, Child Tax Credit, Housing Benefit, Disability and more. The stated aim - that no-one should be worse off if they start doing some work - at first sounded a bit sensible.
Now come the details. There are many of them, and we've only tried to understand the two that would seem to affect many freelance journalists - many of whom have to make up their income with the Tax Credits.
The Department for Work and Pensions (DWP) has proposed, if we understand them, that anyone claiming tax credits would have to demonstrate, when asked, that they were working at least 35 hours per week at at least minimum wage. If they failed to demonstrate that, they could have their tax credit cut, or be sent on a training course. What the DWP actually says is that it wants to expand what it calls “conditionality”quot; rules the tax credits.
Also, there are plans for “real-time income reporting”quot;. So they're planning a big, new, Revenue computer scheme? That'll go well, then. And, if it ever worked, what would a freelance have to do? Log into it every time we got a cheque?
And how is the 35 hours thing supposed to work for someone who decides to do some proper investigative journalism - living on savings (and tax credit) for a month or two to research a story, then getting the cheque? Can the DWP hoick you off the 60 hours a week you're putting into story to get trained in how to, er, work more hours?
If any readers are expert in these things, and the obscure dialects of English in which they are specified, please... help! Once we've understood the question, we'll likely start answering it with campaigning.
...and they're at it already...
After we went to press we received a report that freelances who are on Working Tax Credit have recently been contacted by the Working Tax Credit compliance office requesting proof that they have been working the current required minimum of 30 hours a week.
One of these freelances does a lot of writing/editing/sub-editing work on spec from home - which involves contacting potential clients, engaging in publicity and paperwork.They also write and are paid for fiction. They spoke to someone else who has received a similar letter in November, who was told that the Working Tax Credit compliance office have checked about 16,000 people, and there seem to be more to come.
The Freelance couldn't possibly speculate on whether this is just a coincidental and routine series of checks, or whether it's some sort of curtain-raiser to the introduction of Universal Credit.
In any event, freelances on Working Tax Credit are advised to take extra care to ensure they have documentary evidence of working at least 30 hours a week. This could, for example, take the form of keeping a rudimentary time-sheet; being organised about archiving those emails pitching stories to potential clients; and going through phone-bills highlighting the "work" calls including those following up on pitches. And don't forget to include hours spent attending LFB meetings for the purposes of networking, a term which has the word "work" in it.
Self-audits like these are a good idea anyway, as they come in handy for the purposes of doing your own tax return - especially should HMRC decide to investigate you. And they give you a more precise idea of your own business expenses with a view to claiming them.
With an enforced period of little or no work coming up, and the 31 January deadline to file your tax return approaching, now's the time to get to work on the admin. See also the Freelance Fees Guide advice on tax. NUJ members can also use the free Tax Helpline with HW Fisher accountants, on 020 7874 7875 or 020 7380 494.
More soon. The immediate message is: if you get such a request, don't panic (unless there is documentary evidence that you have spent every waking moment of the last three months messing around on Facebook™). They want evidence. Sigh, and provide it.
...and have been for a while
It seems that the proposed amendment codifies existing practice. HMRC guidance on Working Tax Credit helpfully says:
If you're self-employed
Put down the number of hours you normally spend working in your business, either on work billed to the client or related activity, for example:
- trips to wholesalers and retailers
- visits to potential clients
- time spent on advertising
- cleaning the business premises
- cleaning a vehicle used as part of the business, for example a taxi
- research work
If you work from home, include time spent travelling to see customers.
If you have only just become self-employed, use the number of hours you normally expect to work in a week.
You as a journalist should include time pitching stories and chasing payment. Whether the time you spent reading this and the above link counts, we leave to you.