If you are a Sole Trader, Self-employed or Director of your own company, read below
AtW have clarified the rules about getting AtW support if you are self-employed, run your own business, and/or are work as a Director of your own company. However many Deaf people still have questions. This page clarifies the rules for being self-employed, makes it clear what AtW will ask you to show them as proof of your business, and answers those questions.
If an adviser asks you for something different, please tell them about this DeafATW page. If they disagree, you can let DeafATW know and/or you can complain to AtW.
Please let DeafATW know if anything is not clear, or if you have other questions. (BSL will be filmed soon).
If an adviser asks you for something different, please tell them about this DeafATW page. If they disagree, you can let DeafATW know and/or you can complain to AtW.
Please let DeafATW know if anything is not clear, or if you have other questions. (BSL will be filmed soon).
What evidence do you need to show AtW?
When your business is starting or is in its first year, you need to show AtW:
In the second year of your business you need to show AtW:
This set of accounts is the same as you need to use for the HMRC. This means that:
As this information may not be ready straight away at the end of the financial year, a reasonable amount of time (grace period) should be agreed to give you time to finish your accounts.
AtW know that your HMRC tax year probably won't match your AtW award year. Because of this they said that the first year of the award may be for longer than one year, so that in future years they more closely match. (This sentence updated 18/7/16).
In the third year of your business, and every year after, you need to show AtW:
This set of accounts is the same as you need to use for the HMRC. So:
As this information may not be ready straight away at the end of the financial year, a reasonable amount of time (grace period) should be agreed to give you time to finish your accounts.
If you apply for AtW support after your business has been running for more than a year:
What you need to show AtW depends on how old your business is. So if your business is three years old when you first apply to AtW, then you need to show AtW the information required for a three year old business, i.e. the previous year's set of accounts.
However, the difference is that you will qualify for a year's support to give you time to show that your business is currently turning over more than the Lower Earnings Level, even if your business didn't have turnover more than the Lower Earnings Level before you applied for AtW support.
- Your Unique Tax Reference number (UTR), AND
- A business plan showing expected turnover (not profit).
- If you are an actor etc. you may be a Sole Trader, but not consider yourself a business. If that is the case then you can show ATW your CV instead of a business plan.
- There is no minimum turnover required for the first 12 months for a brand new business start-up. (This is called a disregard).
- You are only allowed to claim one 'disregard' for a new business every five years. So if you have claimed a first year 'disregard' for one of your businesses within the last five years, you can apply for AtW support for a new business, but you cannot claim the 'disregard' again. This rule is the same as the Universal Credit (UC) rules as explained under "What if my self-employment changes?"
In the second year of your business you need to show AtW:
- Your first year’s set of accounts. This is to show that it is a real business and actively trading. (Remember there is no minimum turnover).
This set of accounts is the same as you need to use for the HMRC. This means that:
- As a sole trader / partner in a business partnership you need to show your business accounts for your tax self-assessment. (I.e. records of your business turnover for tax purposes).
- As a Limited Company you need to show AtW your statutory annual accounts, and that your company is registered with companies house.
As this information may not be ready straight away at the end of the financial year, a reasonable amount of time (grace period) should be agreed to give you time to finish your accounts.
AtW know that your HMRC tax year probably won't match your AtW award year. Because of this they said that the first year of the award may be for longer than one year, so that in future years they more closely match. (This sentence updated 18/7/16).
In the third year of your business, and every year after, you need to show AtW:
- The previous year’s set of accounts which show that the business has turned over the Lower Earnings Level (LEL) (for the year 2020 to 2021 this is £6,240). Make sure you ask what the Lower Earnings Level is for the current tax year.
This set of accounts is the same as you need to use for the HMRC. So:
- As a sole trader / partner in a business partnership you need to show your business accounts for your tax self-assessment. (I.e. records of your business turnover for tax purposes).
- As a Limited Company you need to show AtW your statutory annual accounts.
- If your business last year (and other years before that) turned over the Lower Earnings Limit (LEL) or more, but for one year turns over less than the LEL (e.g. because of a downturn), then the the AtW adviser can choose to continue support for one more year.
- If your business turns over less than the Lower Earnings Limit (LEL) for two years in a row, then AtW will think that the business is not successful (viable) and will stop AtW support for that business.
As this information may not be ready straight away at the end of the financial year, a reasonable amount of time (grace period) should be agreed to give you time to finish your accounts.
If you apply for AtW support after your business has been running for more than a year:
What you need to show AtW depends on how old your business is. So if your business is three years old when you first apply to AtW, then you need to show AtW the information required for a three year old business, i.e. the previous year's set of accounts.
However, the difference is that you will qualify for a year's support to give you time to show that your business is currently turning over more than the Lower Earnings Level, even if your business didn't have turnover more than the Lower Earnings Level before you applied for AtW support.
FAQs
What are turnover, taxable income, the salary you pay yourself and National Minimum Wage?
Turnover - means how much money is received by your business in one year. (This is what AtW need to know about).
Taxable income - is the amount of income you pay taxes on, after you have taken off expenses, etc.
Salary - this is the amount that you pay yourself from your business.
National Minimum Wage (NMW) is an amount that the government says is the lowest salary someone can be paid per hour. You do not have to pay yourself the NMW if you are self employed, or the Director of your own company.
What is the Lower Earnings Limit?
It's best just to ask the adviser what the Lower Earnings Level is for the years you are looking at. (E.g. 2015-2016 £5,800)
It is roughly the same as the Universal Credit (UC) calculation for the National Minimum Wage for disabled people at 16 hours per week (2015-16 £6.70ph x 16 hours x 52 weeks = £5,574.40), which is also similar to the Lower Earnings Limit (£5,824) used in calculating National Insurance (NI) payments.
What has changed is that before you had to show you had the Lower Earnings Level on income after tax, but now it is done on turnover.
Do Directors of their own Limited companies have to pay themselves the National Minimum Wage (NMW)?
Directors don't have to pay themselves the NMW. What you need to show AtW is that the business that you are a director of is ok, by showing your company's statutory annual accounts.
If you have more than one business that you want AtW support for?
Each business must meet the viability test, i.e. each one must meet the rules explained above, including the Lower earnings Level.
Why do AtW ask me for this information?
1) To show that you really are self-employed, either as an actor (etc.), sole trader, or Ltd business.
2) That your business is a real business and is making enough income to be able to continue as a business.
3) Because AtW understand that when you are self-employed you may do lots of hours of work but not pay yourself very much, because you are building up the business.
Turnover - means how much money is received by your business in one year. (This is what AtW need to know about).
Taxable income - is the amount of income you pay taxes on, after you have taken off expenses, etc.
Salary - this is the amount that you pay yourself from your business.
National Minimum Wage (NMW) is an amount that the government says is the lowest salary someone can be paid per hour. You do not have to pay yourself the NMW if you are self employed, or the Director of your own company.
What is the Lower Earnings Limit?
It's best just to ask the adviser what the Lower Earnings Level is for the years you are looking at. (E.g. 2015-2016 £5,800)
It is roughly the same as the Universal Credit (UC) calculation for the National Minimum Wage for disabled people at 16 hours per week (2015-16 £6.70ph x 16 hours x 52 weeks = £5,574.40), which is also similar to the Lower Earnings Limit (£5,824) used in calculating National Insurance (NI) payments.
What has changed is that before you had to show you had the Lower Earnings Level on income after tax, but now it is done on turnover.
Do Directors of their own Limited companies have to pay themselves the National Minimum Wage (NMW)?
Directors don't have to pay themselves the NMW. What you need to show AtW is that the business that you are a director of is ok, by showing your company's statutory annual accounts.
If you have more than one business that you want AtW support for?
Each business must meet the viability test, i.e. each one must meet the rules explained above, including the Lower earnings Level.
Why do AtW ask me for this information?
1) To show that you really are self-employed, either as an actor (etc.), sole trader, or Ltd business.
2) That your business is a real business and is making enough income to be able to continue as a business.
3) Because AtW understand that when you are self-employed you may do lots of hours of work but not pay yourself very much, because you are building up the business.
The section from ATW guidance that explains about self-employed people, directors, etc.
4th March 2016 (Click here to check the latest version)
What is self employment?
50. For Access to Work (AtW) purposes, self employment is:
51. If the customer is employed by a company that they own but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed. If they pay Class 4 they are self- employed.
52. Work can be done:
53. You must be satisfied that the applicant is self-employed by
54. AtW cannot pay for the costs of setting up a business such as
Company directors
55. If the applicant is employed by a company they themselves own, but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed.
56. Company directors are not entitled to the minimum wage therefore do not have to meet this eligibility condition to be able to get support.
57. Any business, of which they are a director and claiming AtW in respect of, must however satisfy the business viability test.
58. The customer must provide proof that the company is registered with Companies House in Cardiff.
HM Revenue and Customs checks for self-employment
59. To make sure of consistency in determining whether an applicant is self- employed, you can rely on HM Revenue and Customs treatment of the customer’s employment circumstances :
- accounts to demonstrate business viability for an established business or
- a business plan for a new business
Business Viability
60. It is a requirement for a self-employed person or business owner/director seeking AtW support to demonstrate that the business is a viable and legitimate concern.
61. To be considered viable, a business should in the course of normal operations, achieve a minimum level of turnover each year.
62. This level is set at the Lower Earnings Limit (LEL) of £5,824 per annum.
Start-up period and down-turns
63. New businesses or periods of sole-trading may have an initial 12 month period “test trading” period from application where they do not have to turnover the LEL threshold.
64. However, any new application must be accompanied by a business plan. Advisers may decline any self-employment award if, in their judgement, the plan is unlikely to have any prospect of becoming viable.
65. Should self–employed trading or a business that has not previously satisfied viability test fail to achieve turnover of LEL in between annual review periods (excluding test-trading periods), then an award is terminated.
66. If a previously viable business fails to achieve turnover of LEL in between annual review periods, then a further award may be made for the following year, however if the business again fails to turnover the LEL in that following year then the award is terminated.
67. In all cases, periods for which an award is suspended – eg through temporary cessation of trading is disregarded.
Re-qualification
68. A person who receives an award for AtW on a self-employed basis which is subsequently terminated because the business does not satisfy the viability test, may not re-qualify for another self-employment AtW award for a period of 5 years from the original application.
VAT
69.All VAT queries must be signposted to HMRC.
What is self employment?
50. For Access to Work (AtW) purposes, self employment is:
- operating a business either on the customer’s own account or in partnership, or working for an employer on a self employed contractual basis or
- operating a franchised business on a self employed basis
- that the business satisfies the past or prospective viability tests and
- possessing a Unique Tax Reference Number (UTR)
51. If the customer is employed by a company that they own but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed. If they pay Class 4 they are self- employed.
52. Work can be done:
- from home
- on their own premises
- on premises owned or leased by someone else
- on a travelling basis, for example a piano tuner.
53. You must be satisfied that the applicant is self-employed by
- them providing a UTR and
- request accounts for an established businesses or
- a business plan of a standard acceptable to a bank or other financial institution, for example for new businesses.
- In the case of self-employed applicants, such as entertainers who do not necessarily see themselves as being a business, then a UTR and CV is appropriate.
54. AtW cannot pay for the costs of setting up a business such as
- standard items of equipment
- support for fact-finding
- going on courses, seminars or similar events
while the business is being formed.
Company directors
55. If the applicant is employed by a company they themselves own, but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed.
56. Company directors are not entitled to the minimum wage therefore do not have to meet this eligibility condition to be able to get support.
57. Any business, of which they are a director and claiming AtW in respect of, must however satisfy the business viability test.
58. The customer must provide proof that the company is registered with Companies House in Cardiff.
HM Revenue and Customs checks for self-employment
59. To make sure of consistency in determining whether an applicant is self- employed, you can rely on HM Revenue and Customs treatment of the customer’s employment circumstances :
- if employed, they will be taxed under PAYE rules and the employer will pay Class1 National Insurance contributions under the same PAYE rules
- self- employed customers will be taxed under the Self Assessment rules and have a Unique Tax Reference (UTR) number for that purpose. Customers will be managing their Class 2/4 contributions through arrangements with the HMRC National Insurance Contributions Office
- for AtW purposes, all customers who state they are self-employed must provide proof of self-employment by providing:
- accounts to demonstrate business viability for an established business or
- a business plan for a new business
Business Viability
60. It is a requirement for a self-employed person or business owner/director seeking AtW support to demonstrate that the business is a viable and legitimate concern.
61. To be considered viable, a business should in the course of normal operations, achieve a minimum level of turnover each year.
62. This level is set at the Lower Earnings Limit (LEL) of £5,824 per annum.
Start-up period and down-turns
63. New businesses or periods of sole-trading may have an initial 12 month period “test trading” period from application where they do not have to turnover the LEL threshold.
64. However, any new application must be accompanied by a business plan. Advisers may decline any self-employment award if, in their judgement, the plan is unlikely to have any prospect of becoming viable.
65. Should self–employed trading or a business that has not previously satisfied viability test fail to achieve turnover of LEL in between annual review periods (excluding test-trading periods), then an award is terminated.
66. If a previously viable business fails to achieve turnover of LEL in between annual review periods, then a further award may be made for the following year, however if the business again fails to turnover the LEL in that following year then the award is terminated.
67. In all cases, periods for which an award is suspended – eg through temporary cessation of trading is disregarded.
Re-qualification
68. A person who receives an award for AtW on a self-employed basis which is subsequently terminated because the business does not satisfy the viability test, may not re-qualify for another self-employment AtW award for a period of 5 years from the original application.
VAT
69.All VAT queries must be signposted to HMRC.
Self-Employed Deaf AtW users being stopped AtW support (also read if you work for your own limited company)
This does not seem to be a problem for self-employed people with AtW at the moment. This information is here in case this happens to you.
21 September 2014
Recently I have heard from a number of Self-Employed Deaf people who have been contacted by AtW telling them that they are not eligible for AtW support. They normally give one or two reasons:
1) Because you aren’t earning the minimum wage.
2) Because you aren’t making NI Class 2 and/or Class 4 contributions.
Some people have had their AtW support stopped, and at least one told they would need to repay the AtW support they had received.
It is strange that this is happening, because in the AtW Guidance on self-employment it seems clear that neither of these reasons are right. (Below you can download the relevant sections on employment and self-employment).
Earning the minimum wage: In the AtW Guidance this is only required if you are employed. For self employed people “41. There is no requirement for a self-employed customer’s business to be profitable within a specified timescale. Their business must have a history of, or a reasonable prospect of generating income, but there is no lower limit on that income.” (Guidance v 24)
It’s even more puzzling that they are still saying this to people when at least one person who had their AtW support stopped for this reason was told by the Reconsideration panel that this was a mistake, and that they were eligible for AtW support.
Paying Class 2 or 4 NI contributions: AtW Guidance mentions this in several places re self-employed people. First, as one of three possible reasons to consider someone self-employed (“1 - operating a business either on the customer’s own account or in partnership, or working for an employer on a self-employed contractual basis; 2 - operating a franchised business on a self-employed basis; 3 - paying Class II National Insurance contributions”. It is clear that not all of these conditions can be required, e.g. 1 & 2 wouldn’t both be true at the same time.
Later it is described as one of the checks of self-employment – “for Access to Work purposes, all applicants who state they are self employed must provide proof of self-employment. This may be in the form of: a National Insurance bill (or other correspondence) for Class 2 NICs from HM Revenue and Customs”
It makes sense that NI class 2 or 4 contributions wouldn’t be required, as you only pay them if you earn above a certain amount, and there isn’t a requirement for you to do that.
If this happens to you, then you can explain this to the adviser, and Reconsideration panel.
If AtW don’t listen to this, and/or if AtW are telling you that you have to pay them money back because of this, please complain and contact DeafATW for further suggestions and support.
Working for your own limited company:
If you work for your own limited company, you may think you are simply self-employed. But the AtW Guidance says "If the applicant is employed by a company that they themselves own, but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed. If they pay Class 2 or Class 4 they are self-employed."
If you are unsure whether you are considered self-employed or employed by AtW, you should contact them to check.
If you are considered as employed, then in order to qualify for AtW support you must pay yourself at least the minimum wage.
If you didn't realise this, and AtW did not tell you that you had to earn the National Minimum Wage, then AtW should act in good faith an allow you to put it right, i.e. start paying yourself the National Minimum Wage. If they don't act in good faith, and did not give you the information you needed to understand what you had to do, then complain, and contact DeafATW.
21 September 2014
Recently I have heard from a number of Self-Employed Deaf people who have been contacted by AtW telling them that they are not eligible for AtW support. They normally give one or two reasons:
1) Because you aren’t earning the minimum wage.
2) Because you aren’t making NI Class 2 and/or Class 4 contributions.
Some people have had their AtW support stopped, and at least one told they would need to repay the AtW support they had received.
It is strange that this is happening, because in the AtW Guidance on self-employment it seems clear that neither of these reasons are right. (Below you can download the relevant sections on employment and self-employment).
Earning the minimum wage: In the AtW Guidance this is only required if you are employed. For self employed people “41. There is no requirement for a self-employed customer’s business to be profitable within a specified timescale. Their business must have a history of, or a reasonable prospect of generating income, but there is no lower limit on that income.” (Guidance v 24)
It’s even more puzzling that they are still saying this to people when at least one person who had their AtW support stopped for this reason was told by the Reconsideration panel that this was a mistake, and that they were eligible for AtW support.
Paying Class 2 or 4 NI contributions: AtW Guidance mentions this in several places re self-employed people. First, as one of three possible reasons to consider someone self-employed (“1 - operating a business either on the customer’s own account or in partnership, or working for an employer on a self-employed contractual basis; 2 - operating a franchised business on a self-employed basis; 3 - paying Class II National Insurance contributions”. It is clear that not all of these conditions can be required, e.g. 1 & 2 wouldn’t both be true at the same time.
Later it is described as one of the checks of self-employment – “for Access to Work purposes, all applicants who state they are self employed must provide proof of self-employment. This may be in the form of: a National Insurance bill (or other correspondence) for Class 2 NICs from HM Revenue and Customs”
It makes sense that NI class 2 or 4 contributions wouldn’t be required, as you only pay them if you earn above a certain amount, and there isn’t a requirement for you to do that.
If this happens to you, then you can explain this to the adviser, and Reconsideration panel.
If AtW don’t listen to this, and/or if AtW are telling you that you have to pay them money back because of this, please complain and contact DeafATW for further suggestions and support.
Working for your own limited company:
If you work for your own limited company, you may think you are simply self-employed. But the AtW Guidance says "If the applicant is employed by a company that they themselves own, but draw a salary taxed at source and pay Class 1 National Insurance contributions, they are employed not self-employed. If they pay Class 2 or Class 4 they are self-employed."
If you are unsure whether you are considered self-employed or employed by AtW, you should contact them to check.
If you are considered as employed, then in order to qualify for AtW support you must pay yourself at least the minimum wage.
If you didn't realise this, and AtW did not tell you that you had to earn the National Minimum Wage, then AtW should act in good faith an allow you to put it right, i.e. start paying yourself the National Minimum Wage. If they don't act in good faith, and did not give you the information you needed to understand what you had to do, then complain, and contact DeafATW.