Start up support

Not sure if your business idea is viable? Try Test Trading and ease your way in

test trading shopTest trading is a government initiative to help entrepreneurs come off benefits and become self employed. The leap into self employment is a bold move for any disabled person on benefits, as recent Government policies on benefits have made some disabled people nervous about the future. In recent years people who have come off their benefits to go on Government schemes have found it difficult to get back on the same benefits they were used to. This uncertainty has led many disabled people to be distrusting of Government schemes aimed to help people back into employment.

Test Trading is a scheme which assists with this problem. By joining the Test Trading scheme an entrepreneur can effectively trade for 6 months and still receive their benefits. At the end of the 6 months the person can decide whether to stop trading and remain on their benefits or to carry on trading and come off their benefits. There are some advantages and disadvantages we will discuss later.

To join the scheme budding entrepreneurs will need to contact their DEA Disability Employment Adviser to find out if Test Trading is available in their area. If the scheme is available then your DEA should signpost you to your nearest provider, who will enrol you on the scheme.

There are 3 stages to Test Trading

Stage 1

This will be a meeting between you and a business adviser to discuss your business plans. The adviser will give you support in writing your business plan and will assess what other support you may need.

Stage 2

At this stage you will be developing your business plan, looking for grants and applying for Access to Work.

Stage 3

This is where you will start your business and have your full benefits for 26 weeks. There will be continual support from your business adviser on a weekly basis, via face to face meetings or via the telephone.

Hopefully at the end of the 26 weeks your business will be stable enough to support you and you will come off your benefits.

Before you finish Test Trading you will need to work with your DEA to see if you are eligible for Working Tax Credits, which could offer you further financial support. Test Trading is just one route a disabled person can take when wishing to start up in business. Permitted Work from the Job Centre, Working Tax Credits and starting a Limited Company are other ways to gain financial support whilst starting up in business.

More financial support for Disabled Entrepreneurs, Return to Work Credit

return to work credit moneyReturn to Work Credit is available from Job Centres in the “Pathways to Work” areas (ask your Disability Employment Adviser if you qualify). It is a tax free payment of £40 directly into your bank account for up to 52 weeks. This could mean a disabled person starting their own business could be in line for a payment of £2080 whilst they are on other government schemes. Read my article on Test Trading, Working Tax Credits and Permitted Work.

Usually a person will qualify for Return to Work Credit if;

1. They have been claiming one, or any combination of the following for 13 weeks or more;-

Incapacity Benefit (including credits only)
Income Support (because of your incapacity)
Severe Disablement Allowance
Statutory Sick Pay for 13 weeks or more and now claiming any of the above benefits

2. They are working more than 16 hours a week.

3. They expect a personal annual salary before deductions to be £15,000 or less per year (What you are paying yourself?).

4. They expect the business to last more than five weeks.

Return to Work Credit is a great way of contributing to your wage when on Test Trading or claiming Working Tax Credits. Many disabled entrepreneurs manage on these schemes during the first year of trading. This gives their business a great chance of survival, plus they can concentrate on running the business instead of stressing about how they are going to pay themselves.

Working Tax Credits financial support for an entrepreneur

working tax credit formsA disabled person can apply for working tax credits if they are over 16 years of age, working over 16 hours and will be in business for at least 4 weeks. Most disabled entrepreneurs will qualify for these credits but often don’t apply, as they are worried that in the initial stages of business they will not be working for 16 hours. They think this because they only count the hours they are actually with a client. They should also be counting the hours marketing the business, going to suppliers, doing the accounts etc. All these tasks are included in calculating the total number of hours.

Before starting the business I would contact my Disability Employment Adviser or Working Tax Credits Department and ask that they to do an assessment of how much I would be entitled to. Working Tax Credits are calculated on either your income for the previous year or a prediction of your wages for the year of trading. Most people choose to have the calculation done on what they earned last year as in most cases, this will be the amount of benefits received and should make them eligible.

The amount of Working Tax Credits can vary, but in most cases it’s roughly the same as your current benefits. After you have been trading for a year on your WTC you will have to submit your earnings to see if you qualify for the next year. As most businesses do not make a profit in the first year it is likely that you will be able to stay on the WTC for another year. This will give your business time to get established before you have to take a wage from it. Read my article Working Tax Credits Vs Test Trading Vs Permitted Work to see which scheme could be best for you

Not sure self employment is for you? Try Permitted work and remain on your benefits

Permitted work helping handPermitted Work is a scheme for people on incapacity benefit who wish to try working in a limited capacity. It was designed so people could see if they were physically or mentally capable to work without it affecting their benefits. For entrepreneurs on incapacity this could mean they are able to trade whilst still claiming their benefits, thus testing their idea whilst still having financial support.

Under permitted work rules it is possible for a person on incapacity benefit to work for up to 16 hours and earn up to £88.50 per week profit without it affecting their benefits. You may be able to stay on Permitted Work for 12 months and by then, you should be able to make the decision whether to go self employed full time.

£88.50 does not sound a lot to earn, but it’s worth remembering that’s £88.50 of profit per week! So in your first week you could have an income of £200, if you have costs or expenses of £111.50. £200 income – £111.50 expenses = £88.50. You expenses could be anything from rent, petrol, insurance, stock or phone bill.

Permitted work could be a good way to try out your business idea and give you time to build up your customer base. After the scheme finishes you could be eligible to join other schemes such as Test Trading to extend your time receiving benefits whilst your business grows.

For more information and to see if you are eligible for the scheme, contact a Personal Adviser or Disability Employment Adviser at your local Jobcentre or Jobcentre Plus office.

Business! Where to start? Try your local DEA Disability Employment Adviser

Dea on telephoneA question I am asked regularly by disabled entrepreneurs is “Where do I start?” The answer more often than not is with their DEA or Disability employment Advisor at the local Job Centre. Every disabled person who is not in work and is claiming Benefits should have a DEA. A DEA’s job is to help people into employment or in this case, self employment, so in theory they should be a fountain of knowledge on the subject. Unfortunately because the subject is so broad (deafness, visual impaired, dyslexia, mobility problems) it’s impossible for them to be an expert on every disability and know every scheme, Benefit and organisation who could help you into self employment.

Nevertheless they are a good place to start. I would arrange an appointment with one of them, tell them about your plans to go self employed and ask what support is available.

There are 3 questions I would ask my DEA;-

1. What business organisations do they know of who can offer you support?
2. What Government schemes/benefits can help you start up in business?
3. Do they have any grants available for business start up?

1. Business organisations

They should know business organisations in your local area who can help you, but it’s important that you do your own research on who else is out there. It won’t be the first time your DEA has been asked for self employment advice and they should have had dealings which other organisations offering business support.

2. Schemes and Benefits

Your DEA should know different schemes and Benefits you are entitled to when starting your business. Schemes such as “Permitted Work”, “New Deal Test Trading” and “Return to Work Credit” can be ways of receiving Benefits whilst being self employed.

3. Grants

Sometimes a DEA has a discretionary grant to help people into employment, which could be up to £300.00. Traditionally this grant was used to buy clothing such as a suit for a job interview or some safety clothes for a building site. Now DEA are allowing people starting self employment to buy items needed for their business.

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