New enterprise allowance

JodieR

Apologies for asking so many questions this week, but does anyone know if New Enterprise Allowance is taxable or not? it seems to be a new thing and i can't see it included in the taxable or non taxable lists on HMRC's website and the DWP website isn't much help either!

Pete12

JodieR

It is my understanding that it is not.

Pete12

SandyHood

Its predecessor was not taxable. Not really much help for your question. Sorry.

Jmann

I may have interpreted incorrectly but reading following links, NEA may be taxable?

http://www.dwp.gov.uk/adviser/updates/new-enterprise-allowance/

http://www.hmrc.gov.uk/manuals/bimmanual/bim40405.htm

Pete12

During a recent enquiry of one of the agencies delivering the NEA scheme I was informed twice that the "bounty" was not taxable. Interestingly, it appears the NEA is actually a poorer version of its predecessor (this also emerged during my enquiry), which sandy.hood confirms was not taxable.

Pete12

Simon

When I worked for them, all JSA (Jobseeker Allowance) benefits were counted as taxable benefit.

Pete12

Jobseekers' Allowance

With regard to JSA - this is certainly a taxable "benefit".

Apparently NEA, although accessed via the JSA route (whether or not JSA is actually received) is not deemed to be a continuation of JSA but something that those becoming self-employed "move onto" and, although JSA-like in many respects, is subject to other rules.

What seems clear is that it is not easy to find a definitive answer from the usual sources (which is why JodieR posed the query in the first place and I decided to contact a NEA implementor).

Perhaps someone would like to check with a local Jobcentre/NEA implementing agency and post their findings to help everyone out?

Pete12

JodieR

Thanks for all the replies...

I phoned HMRC and spoke to a technical advisor who didn't know the answer and suggested I called the DWP (who issued the payment advices to my client)

I phoned the DWP and they didn't have a clue whether it was taxable or not and suggested I phoned the job centre who he was previously claiming JSA through.

I phoned said job centre and eventually got through to someone who said 'well if it's issued by DWP then it is a taxable benefit'. I asked whether it should be included with his self employment income or in the benefit boxes and he said the benefit boxes. I asked whether he was 100% sure about this and he said he was, but I'm not really conviced as it didn't sound like he'd heard of the scheme when I first spoke to him.

TBH I don't think that my client has earned enough to pay tax in 2011/12 anyway so there's no harm including it and I'm not going to spend any more time digging!

Pete12

After waiting for sufficient time to elapse for memories to fade - and avoid the risk of being asked whether new hearing aid batteries are a tax-allowable expense for accountants - I again asked a DWP officer whether NEA is treated as taxable income.

This time the officer quoted from their intranet guidance notes:

" It is disregarded by HMRC for income tax, NI (but not Class 2 contributions) and tax credit purposes."

Pete12

JodieR

Pete12 wrote: »

" It is disregarded by HMRC for income tax, NI (but not Class 2 contributions) and tax credit purposes."

***bangs head against wall***

thanks pete.

i'm tempted to just leave it out and put a note in the white space along the lines of 'too much conflicting advice as to where this NEA should go, put it where you like!'

Hedgecott

I realise that this is an old question, but a client has just referred me to this post so I though that I would try to clarify things. Pete12 is correct in that it is disregarded by HMRC for income tax for the individual, but that is because it is part of the income of the enterprise so should form part of the company/sole trader accounts. The HMRC link below should help to provide a reference.

http://www.hmrc.gov.uk/manuals/bimmanual/bim40405.htm

As for the confusion and incorrect information from various DWP and NEA agents, it seems that the passage of time has not improved the level of knowledge.

Michael
www.Hedgecott.co.uk