lughildanach
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The difference between the self-employed and the employed as far as the social welfare system is concerned is getting less and less. The nature of self-employment has changed over the years and there is growing recognition that the self-employed often need access to supports which were originally designed for the employed. Here are some pointers for the self-employed (or those considering self-employment) when it comes to your rights under the social welfare system. However, please do keep an eye on developments, as these rules are constantly evolving.
Jobseekers Payments
Recent changes introduced Jobseekers Benefit for the self-employed. There is now a specific payment known as Jobseekers Benefit (Self Employed) However, the conditions for this payment are not identical to the conditions for the regular Jobseekers Benefit. There is a requirement to have at least three years (154 weeks) contributions in your lifetime and a requirement that you must have completely given up your self-employment. You can however work up to three days per week as an employee and retain some payment. The usual requirements of being capable of, available for, and genuinely seeking full-time work also apply. There is no means test for this payment.
Despite what many people will tell you, the regular Jobseekers payments have always been available to the self-employed. However, that doesn't mean that there haven't been difficulties in getting those payments if you were self-employed. Before the recent changes, self-employed PRSI contributions (Class S) did not help you qualify for Jobseekers Benefit. However, if you have worked as an employee within the past five years (and particularly two years before the date of your claim) you can qualify for this payment under the normal rules. If you have enough contributions as an employee, it does not matter that your last work was self-employed. In this case you do not have to give up your self-employment, or you can even start up self-employment if you already qualify. You must still be available for and seeking full-time work.
For those who do not have the PRSI contributions, and for those who have not given up their self-employment completely, Jobseekers Allowance is still available. Many social welfare officials will tell you that you must cease your self-employment, but this is NOT required. A cessation certificate from Revenue will certainly make for a smoother application, but it is not a legal requirement for payment. You are expected to look for full-time work. While it is acceptable to try to build your business by looking for more customers etc, you may also be expected to apply for PAYE jobs.
Jobseekers Allowance is means tested (including income from spouse/partner/cohabitant). Every single euro that you earn from your self-employment will be taken into account (which contrasts with the employed person, who receive a 20 euro disregard for up to three days work, and only have 60% of the balance assessed). If you are making a loss you will not have any income assessed from your payment, unless you are continuing to take drawings, which can be assessed as income in some circumstances. If your profit is below the social welfare rate, you should receive some payment.
The real problem is in how your claim is examined and this will often depend on the Social Welfare Inspector who examines your claim. You will generally be asked for your last complete tax assessment and accounts to bring you up to the current date. They will often ask for accounts prepared by an accountant, but there should be no reason why they do not accept the same information provided by yourself. Strictly speaking they do not have to accept the accounts accepted by Revenue, and so they can ask to see the vouching documentation that you have based your self-assessment on. However, as your income has likely decreased if you are thinking about a Jobseekers claim, the previous accounts will only tell the story of what has gone before, and may not reflect the current position. You should provide any other documentation that shows why your level of work and income have decreased (eg. letters from those who have lost contracts with, bank statements, order books etc.). The test in the legislation is your likely income over the next 12 months, so if you can persuade the Inspector that your income has decreased to below the social welfare limit, you should receive a payment. In some cases, it can be as crude as plucking a figure out of the air. If you are unhappy with the assessment that has been reached, you can appeal the decision to the Social Welfare Appeals Office who will listen to you and in my experience provide a very fair and balanced appeal procedure. They are however bound by the same legislation as the deciding officer, so you must frame any appeal within the terms of social welfare legislation.
If your spouse or partner is on Jobseekers Allowance, your income from self-employment will be fully assessed. If they are on a PRSI payments such as Jobseekers Benefit, they may be able to claim an increase in their payment for you, depending on your income.
Illness
Entitlement to Invalidity Pension was expanded recently to the self-employed. This is a long term payment that requires five years (260 weeks) PRSI contributions made in Ireland to receive the full amount. You must also have 48 PRSI contributions in either the most recent tax year, or the year immediately before. It is therefore important that you do not leave two full tax years before you apply for this payment. It is much easier to get Invalidity Pension if you have been out of work already for one year, so the optimal time to apply is after one year of being sick, but while you still have contributions in the year before last. However, if it is clear that you will never work again, you can apply immediately.
However, the short-term Illness Benefit has not been extended to the self-employed. Of course, if you have been an employee in recent years, you may qualify based on your PAYE contributions, but if you do not have these, you will not be able to qualify. If you do not have the contributions to qualify for Illness Benefit, you can still qualify for Supplementary Welfare Allowance if you can show that your income has dropped to below the social welfare rate (201 euro for a single person, 335.70 for a couple). Almost all income is assessed for means, but if you have no means, this payment is available until you reach the stage where you consider applying for Invalidity Pension or are able to return to work.
If you do not meet the conditions for Invalidity Pension, eg. you don't have the five years PRSI or if you don't meet the strict medical conditions, you may be eligible for Disability Allowance. This is a means tested payment, but unlike Jobseekers payments, self-employment is considered in a similar manner to employment. The first 120 Euro of self-employment is disregarded, and 50% is disregarded up to 350/week. Above that, all income is fully assessed.
You cannot continue to work on Invalidity Pension or Illness Benefit, and this includes self-employed work. However, if you are on either of these payments and are thinking of re-starting work, you can apply for Partial Capacity Benefit. This usually involves reducing your payment by 50% (but it can be lower depending on how severe the injury/illness is). There is no restriction on the hours or wages you earn, but your payment will be reviewed periodically to make sure you still meet the medical criteria.
Carers Payments
Carers Allowance does not require any PRSI contributions and is available to those who are, or have been, self-employed. You must be providing full-time care, but you are permitted to work up to 18.5 hours outside of the home. Only hours working outside of the home are counted, so if you are self-employed and work from home full-time, this is permitted. There is a means test, but the first 332.50 euro per week is disregarded for a single person (665/week for a couple).
Carers Benefit is available to those who have employed PRSI contributions. It is not available to those with only self-employed contributions, but if you have been employed and do qualify, you can undertake self-employment as long as you are not working outside of the home for more 18.5 hours per week.
If you are looking after a disabled child, you can receive Domiciliary Care Allowance. This is not means tested and has no restriction on employment or self-employment. It is payable up to the child's 16th birthday.
Maternity Benefit
Maternity Benefit rules are slightly different for the self-employed. You must have a full year's PRSI record for two years ago, or the year either before or afterwards. So if you are claiming in 2020 you must have paid your PRSI for any of the years 2017, 2018 or 2019. If you were employed previously, you can combine your PAYE contributions with your self-employed contributions to qualify. However, you should note that you must be currently in insurable self-employed to qualify for Maternity Benefit. This means that you must be trading in the current year and expect to be earning at least 5,000 Euro. If you have de-registered from self-employment, you will not be eligible.
One Parent Family Payment
Self-employed income is treated the same as income from employment. You can earn up to 165 Euro each week without it affecting your payment. You can earn up to 425 euro per week and still retain some payment.
Working Family Payment/FIS
Hours worked as self-employed do not count towards the 19 hours required for this payment. However, any income from self-employment is assessed when determining family income.
Jobseekers Payments
Recent changes introduced Jobseekers Benefit for the self-employed. There is now a specific payment known as Jobseekers Benefit (Self Employed) However, the conditions for this payment are not identical to the conditions for the regular Jobseekers Benefit. There is a requirement to have at least three years (154 weeks) contributions in your lifetime and a requirement that you must have completely given up your self-employment. You can however work up to three days per week as an employee and retain some payment. The usual requirements of being capable of, available for, and genuinely seeking full-time work also apply. There is no means test for this payment.
Despite what many people will tell you, the regular Jobseekers payments have always been available to the self-employed. However, that doesn't mean that there haven't been difficulties in getting those payments if you were self-employed. Before the recent changes, self-employed PRSI contributions (Class S) did not help you qualify for Jobseekers Benefit. However, if you have worked as an employee within the past five years (and particularly two years before the date of your claim) you can qualify for this payment under the normal rules. If you have enough contributions as an employee, it does not matter that your last work was self-employed. In this case you do not have to give up your self-employment, or you can even start up self-employment if you already qualify. You must still be available for and seeking full-time work.
For those who do not have the PRSI contributions, and for those who have not given up their self-employment completely, Jobseekers Allowance is still available. Many social welfare officials will tell you that you must cease your self-employment, but this is NOT required. A cessation certificate from Revenue will certainly make for a smoother application, but it is not a legal requirement for payment. You are expected to look for full-time work. While it is acceptable to try to build your business by looking for more customers etc, you may also be expected to apply for PAYE jobs.
Jobseekers Allowance is means tested (including income from spouse/partner/cohabitant). Every single euro that you earn from your self-employment will be taken into account (which contrasts with the employed person, who receive a 20 euro disregard for up to three days work, and only have 60% of the balance assessed). If you are making a loss you will not have any income assessed from your payment, unless you are continuing to take drawings, which can be assessed as income in some circumstances. If your profit is below the social welfare rate, you should receive some payment.
The real problem is in how your claim is examined and this will often depend on the Social Welfare Inspector who examines your claim. You will generally be asked for your last complete tax assessment and accounts to bring you up to the current date. They will often ask for accounts prepared by an accountant, but there should be no reason why they do not accept the same information provided by yourself. Strictly speaking they do not have to accept the accounts accepted by Revenue, and so they can ask to see the vouching documentation that you have based your self-assessment on. However, as your income has likely decreased if you are thinking about a Jobseekers claim, the previous accounts will only tell the story of what has gone before, and may not reflect the current position. You should provide any other documentation that shows why your level of work and income have decreased (eg. letters from those who have lost contracts with, bank statements, order books etc.). The test in the legislation is your likely income over the next 12 months, so if you can persuade the Inspector that your income has decreased to below the social welfare limit, you should receive a payment. In some cases, it can be as crude as plucking a figure out of the air. If you are unhappy with the assessment that has been reached, you can appeal the decision to the Social Welfare Appeals Office who will listen to you and in my experience provide a very fair and balanced appeal procedure. They are however bound by the same legislation as the deciding officer, so you must frame any appeal within the terms of social welfare legislation.
If your spouse or partner is on Jobseekers Allowance, your income from self-employment will be fully assessed. If they are on a PRSI payments such as Jobseekers Benefit, they may be able to claim an increase in their payment for you, depending on your income.
Illness
Entitlement to Invalidity Pension was expanded recently to the self-employed. This is a long term payment that requires five years (260 weeks) PRSI contributions made in Ireland to receive the full amount. You must also have 48 PRSI contributions in either the most recent tax year, or the year immediately before. It is therefore important that you do not leave two full tax years before you apply for this payment. It is much easier to get Invalidity Pension if you have been out of work already for one year, so the optimal time to apply is after one year of being sick, but while you still have contributions in the year before last. However, if it is clear that you will never work again, you can apply immediately.
However, the short-term Illness Benefit has not been extended to the self-employed. Of course, if you have been an employee in recent years, you may qualify based on your PAYE contributions, but if you do not have these, you will not be able to qualify. If you do not have the contributions to qualify for Illness Benefit, you can still qualify for Supplementary Welfare Allowance if you can show that your income has dropped to below the social welfare rate (201 euro for a single person, 335.70 for a couple). Almost all income is assessed for means, but if you have no means, this payment is available until you reach the stage where you consider applying for Invalidity Pension or are able to return to work.
If you do not meet the conditions for Invalidity Pension, eg. you don't have the five years PRSI or if you don't meet the strict medical conditions, you may be eligible for Disability Allowance. This is a means tested payment, but unlike Jobseekers payments, self-employment is considered in a similar manner to employment. The first 120 Euro of self-employment is disregarded, and 50% is disregarded up to 350/week. Above that, all income is fully assessed.
You cannot continue to work on Invalidity Pension or Illness Benefit, and this includes self-employed work. However, if you are on either of these payments and are thinking of re-starting work, you can apply for Partial Capacity Benefit. This usually involves reducing your payment by 50% (but it can be lower depending on how severe the injury/illness is). There is no restriction on the hours or wages you earn, but your payment will be reviewed periodically to make sure you still meet the medical criteria.
Carers Payments
Carers Allowance does not require any PRSI contributions and is available to those who are, or have been, self-employed. You must be providing full-time care, but you are permitted to work up to 18.5 hours outside of the home. Only hours working outside of the home are counted, so if you are self-employed and work from home full-time, this is permitted. There is a means test, but the first 332.50 euro per week is disregarded for a single person (665/week for a couple).
Carers Benefit is available to those who have employed PRSI contributions. It is not available to those with only self-employed contributions, but if you have been employed and do qualify, you can undertake self-employment as long as you are not working outside of the home for more 18.5 hours per week.
If you are looking after a disabled child, you can receive Domiciliary Care Allowance. This is not means tested and has no restriction on employment or self-employment. It is payable up to the child's 16th birthday.
Maternity Benefit
Maternity Benefit rules are slightly different for the self-employed. You must have a full year's PRSI record for two years ago, or the year either before or afterwards. So if you are claiming in 2020 you must have paid your PRSI for any of the years 2017, 2018 or 2019. If you were employed previously, you can combine your PAYE contributions with your self-employed contributions to qualify. However, you should note that you must be currently in insurable self-employed to qualify for Maternity Benefit. This means that you must be trading in the current year and expect to be earning at least 5,000 Euro. If you have de-registered from self-employment, you will not be eligible.
One Parent Family Payment
Self-employed income is treated the same as income from employment. You can earn up to 165 Euro each week without it affecting your payment. You can earn up to 425 euro per week and still retain some payment.
Working Family Payment/FIS
Hours worked as self-employed do not count towards the 19 hours required for this payment. However, any income from self-employment is assessed when determining family income.
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