Self Employed doing sparodic work for an employer

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    I have an appeal from someone whose partner if self employed, his self employed income has been averaged over a 52 week period.
    He has taken on odd weeks work for an employer to suppliment his income when he has no self employed work.
    To assess the claim we have left his self employed income on for the year and added his wages for the weeks he has worked. This has resulted in some weeks showing that he had a self employed income as well as earnings.
    An appeal has been made as the claimant does not agree with this as he didn’t receive any self employed income that is why he was working.
    We were not told about his earnings until the end of the financial year as the claimant believed that we would average them in with the self employed income to get a total earned for that year.
    Am I right in saying that we have assessed correctly as earnings should be used for the period they relate to and self employed should be averaged.
    Any help would be appreciated I’m finding it a difficult appeal to deal with.


    I would try to explain that he gets the same amount of HB either way (assuming there is some level of entitlement throughout the whole period).

    Say he’s earned X per week from 48 weeks of self employment and Y per week from 4 weeks of employment over the last year.

    Reassessing week by week would give you a total annual income of (X + X + X + Y + X + …. + X + X) or 48X + 4Y

    Averaging out the self-employed over the full year and counting the employed income for the weeks worked would give you total annual income of (48X / 52 x 52) + 4Y, or 48X + 4Y again.

    The way the tapers work, the only difference in using one method over another is that entitlement will be slightly less for some weeks and slightly more for others – but over a year it should be the same.

    If an overpayment has occured, the overpayment should be the same regardless of the method used.

    Neither method is necessarily incorrect – there is nothing that says you must use a previous year’s accounts for self-employed income. All that matters is that the period over which you are calculating earnings is appropriate to the period for which it will be taken into account.

    If you can find a way to explain this to your claimant to the extent that he agrees to withdraw the appeal, you deserve a medal!

    Kevin D

    On the basis of the clmt’s appeal, his s/e earnings must only be averaged over the weeks he works. That will increase his s/e earnings for those weeks. He can’t have it both ways.

    For HB/CTB, all income must be attributed to the period it is in respect of unless legislation expressly provides otherwise. This applies equally to employed earnings and self-employed earnings. However, the legislation allows particular methods of calculations for those types of income which means the “attributable” aspect does not require an absolute attribution on a week by week basis. In short, it is entirely legitimate to assess earnings (both types) over a period that is reasonable (but not exceeding 52 weeks / a year). So long as the calculation reasonably reflects the claimant’s circumstances overall, that will normally satisfy the legislation.

    In my view, based on the info given, there is nothing “wrong” with the way s/e earnings have been assessed in this case. The nature of being self-employed means there will be busy periods and otherwise. There seem to be two options:

    1) stick to your original decision and let the appeal proceed; or
    2) recalc the s/e earnings over the number of weeks worked.

    If the former, I would bring the matter of the effect of a reassessment of s/e employed earnings to the attention of the Tribunal in any submission. [b]CH/329/2003[/b] and [b]R(JSA) 8/03[/b] contain observations that may be of interest.


    I have explained to her that her self employed income would go up and she accepts that.

    I have also explained that the income used over the year is the same and she understands that to but she feels it is not representative to show that he has 2 lots of income in for the weeks when he is working for an employer as he didn’t have any self employed work.

    My query is that we have agreed with her that we will use the self employed income from the previous year. How would we then deal with the self employed every time she provides evidence that he has worked for an employer?

    If we go with the second option that Kevin has put then wouldn’t we need to continualy reassess the self employed earnings back to the start of the financial year and cause overpayments every time he works?

    I thought earnings had to be used for the period they relate to, I didn’t think that we could use them 12 months later in with the self employed income and average them out.

    I think that I am making this harder work than it needs to be.


    The only reason we tend to assess self-employed income based on the previous year’s earnings is because the accounts only become available around 6-9 months after the end of the financial year. If someone provided weekly or monthly self-employed declarations there is no reason you could not use them (subject to having sufficient staff levels to actually carry out assessments that often!).

    As long as the previous year’s accounts are representative of current income and expenditure, its OK to use them. If there has been a change in the business, it may be appropriate to seek a more recent statement of income and expenditure.

    You would only need to reassess retrospectively, potentially creating an overpayment, if there has been an identifiable change in circumstances.

    What I would do is this: Say you are looking at the year starting April 2010. You’ve probably already used your claimant’s accounts for 2009/2010 to calculate an average over the year. You now have say four weeks in 2010/2011 where you know the claimant was not working self-employed, but did some PAYE work instead. Change the s/e income by dividing by 48 instead of 52 – this will give you a slightly higher weekly figure. Then remove the s/e income for the 4 weeks concerned, replace with his payslips income. You should be left with an overpayment for the 48 weeks of the year equivalent to the credit for the 4 weeks he was on PAYE. You can use the extra benefit for those 4 weeks to reduce the overpayments and lapse the appeal. Claimant will then need to be notified of the overpayment for the 48 weeks due to the reassessment he requested. If everything lines up nicely after offseting, I would hope the new overpayment is exactly the same as the original one.


    I can see what your saying but she never knows when he is going to be working for an employer and she should notify us withing a month of any work as this is a change of circumstances, therefore if we are assessing on last years self employed income and she provides a payslip for a weeks work we would need to add it to the claim when we receive it. Therefore we would need to take the years self employed income and reduce it by the number of weeks worked going back to 1st April up to 31st March which would cause reassessments every time he does a weeks work.

    This would be a nightmare.

    She has agreed to send us the accounts each year for the self employed so seems to be happy with that.

    I’m sorry if I’m not getting this but I just dont know how else we can assess and the regs dont seem to say that we have to use earnings from an employer for the period in which they covered (which to be honest I thought they did) so an appeal is proving hard to write.


    Unfortunately, the current benefits system was not really designed for this type of worker. There are more and more people nowadays working multiple jobs through agencies, not sure if they are employed or self-employed in any given week.

    I thought the problem here was he only told you about the occasional employed work at the end of the year – hence my suggestion. I didn’t really consider how you would deal with this on a prospective basis. Is there any pattern to periods where he is *not* working on a self-employed basis (eg holidays) that you could use to estimate when he will be working for an employer? Or is it more a case of, when the PAYE work becomes available, he puts his business on hold to undertake the PAYE work?


    Both self employed and employed earnings in these circumstances can be averaged over whatever period gives the most accurate assesment of the claimants real income. This period can be for up to 52 weeks for both. [Reg 29(3) and 30(1)]
    I would add that it might be to look at CH/1780/2005 in the context of employed as opposed to self employed earnings


    The problem is we are now being notified each time he does any work for an employer (which is when he has no self employed work) so we have to deal with the wage slip when we get it surely rather than not using them until the following year?

    There is no pattern to when he works just when his self employed work drops off.


    I’m impressed there is this much work available that whenever his business slows down he can pick up a job so quickly!

    I think given the chaotic nature of his work you can’t really attribute these breaks as part of his regular work pattern. This seems to be a claimant who has lots of changes in circumstances and should be dealt with accordingly. Assess his s/e income over a recent period where he has worked for himself every week. Then when he advises you he’s done some PAYE work you can end the s/e work and start the PAYE. When the PAYE work ends, you can revert to the previous s/e calculation. Rinse and repeat. 8)


    Is this really practical because we will be using the self employed earnings for the last financial year spread over a 52 week period. The yearly amount of this wont change but if he gets a job for a week and we have to take it out we will have to reassess the self employed yearly income over 51 weeks and amend going back and forward.
    Then if he works again for another week we will have to do the same.
    He works for an agency when his self employed work drops off.
    If I go to appeal on this do you think we are assessing correctly by having both self employed earnings and PAYE earnings on for the same period.
    Has anyone come across this before.
    I have read CH/1780/2005 but dont feel this helps with the calculation of this case.


    I think you are assessing it properly by having both self employed earnings and PAYE for the same period, but if last years profiit/loss account is not an accurate assesment of this years self employed earnings, you can use a different method to get an accurate result.

    Your methodology for assessing employed earnings can similarly be flexible in order to produce an accurate result. You can average out employed earnings over a longish period if that is more accurate.

    I may be grossly oversimplifying, but the Council just used the wrong period in CH/1780/2005.


    You don’t need to use a whole year to assess s/e income.

    Just pick any recent period where he has worked for himself every week. Use that to calculate weekly s/e income. Then when he takes on some temp work, you can simply end the s/e income and start the PAYE income. There will be no need to recalculate the s/e income because he worked every week during the period you would be using.

    Eg: Say you know he worked for himself for weeks 1 – 8 and earned £960 after expenses and tax, so £120 per week.
    You use this figure from week 1 until he notifies you of a change.
    In week 12 he takes on employed work for 2 weeks at £100 per week.
    You supersede the previous decision from week 12 based the new income.
    In week 14 he returns his attentions to his business so you supersede again to the previous £120 per week.


    Alternative method would be to use previous years s/e income and leave it at the same rate when he starts work, since previous year’s accounts will already take account of any periods he has not worked. You could reasonably assume that he will spend a similar proportion of his time on his business from one year to the next.

    Don’t worry about a tribunal – you have so many options available to you that I’m sure you’ll be able to revise the disputed decision and come to some arrangement about how to treat his earnings on an ongoing basis.

    Just think – when same-time PAYE data is being fed into Universal Credit this will all be done automatically…


    Does anyone have a link to R(JSA)8/03?

    Kevin has suggested I read this but I don’t seem to be able to find the decision.

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