HMRC - TAX CREDITS - SELF EMPLOYED

Can someone help please? Why do HMRC want to know your self-employed sole trader profits when calculating Tax Credits rather than the amount of drawings a person will take each month? A friend is looking to leave their current job, they are currently in employed, to become a sole-trader. To do this they need to know the tax credits they will be entitled to (if any, hopefully they will be successful enough not to need credits). They are looking to take a set amount in drawings each month and leave the remainder in the business to enable the business to grow (buy more advance equipment etc), but HRMC do not seem to be considering the growth factor. Is there something my friend and I are missing?

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  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderPosts: 1,462Moderator, MAAT, AAT Licensed Accountant
    edited March 2016
    Just to add you may want to have this thread moved to another category (you are in the feedback for AAT category)


    And thanks for the LOL Ryan - this is fun!
    RyanMIP
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