I read an article regarding living off Job Seekers Allowance (the DOLE) which is apparently £60.50 a week now, was in 2009 when I read the article, now as I update some info (April 2014) it’s £56.80 for 16 to 14 year olds and £71.70 for 25 or over.
The comments brought back memories of when we as a family claimed UK benefits due to disability and made me think some people would be better off starting their own business (self employed) rather than being registered as unemployed and claiming job seekers allowance (JSA) or income support: in the UK you claim income support if you haven’t paid enough national insurance contributions.
We have a system of working tax credits and child tax credits that aid families in work and it can work for the self employed (like I was).
Start a Home Based Business
When I started my first home based business selling adult lingerie and sex toys (online store) I’d been out of University for about three years after leaving on medical grounds: chronic back pain, have had a back operation to fuse two discs.
I’d been unable to finish a BSc degree in genetics or work in a 9 to 5 capacity due to disability and had been claiming income support on medical grounds: I wasn’t classed as unemployed, I was too disabled to work and in reality no one would hire me to do a job in an office because I can not sit in a chair for more than 10 minutes.
My only options were (and still are) to work from home or not work at all.
When I decided to start a small home business I believed you had to register a LTD company or something (I even got the forms from Companies House) and jump through major hoops to start a business (quite funny in hindsight).
I couldn’t have been more wrong, I registered as self employed (sent a form in if I recall correctly) and that was pretty much it, I was self employed and in business!
At first I thought to be able to survive while running a business from home I’d HAVE to make a profit, a case of if I didn’t make X £s a week working, we wouldn’t eat (had a wife and three sons to support).
I was so wrong, in my first tax year (~6 months trading) I lost around £500 (I did accounts from April to April to make accounting simple), that first 6 months was pretty much setting up the business (learning/building a website), but because I was working full time we could claim working tax credits and child tax credits (called tax credits back then).
Claiming Working Tax Credits and Child Tax Credits
I forget exactly how much tax credits we could claim (wasn’t about the money, I wanted to work), but I’m reasonably sure it was at least as much as income support (I think it was a little more) and we could still claim housing benefit, council tax benefit etc…
Claiming working tax credits/child tax credits is pretty much a helping hand back into work, you can start on a low wage (no wage if self employed) and still get help from the UK government, over time the idea is you make more money and so need less help (that’s how it worked for us anyway).
I didn’t start a home business to claim working tax credits, I hated being disabled and unable to work and the ONLY way for me to provide for my family was to run a business from home/online (I couldn’t sit in a chair for more than 15 minutes).
The Work Capability Assessment
I also hated having to go for the Incapacity Benefit reassessment medical tests (now called The Work Capability Assessment) to be able to claim income support on medical grounds, (basically incapacity benefits when you haven’t paid enough NI contributions) I used to go in a T-shirt and jeans (big mistake**) and one of the medical assessment doctors said I could work!
It took 18 months to go through the benefit appeals procedure and get full income support on medical grounds reinstated, (we had to live off reduced income support) they ‘owed’ us almost £5,000 in unpaid income support by then!
** If you go to see one of the assessment doctors (any doctor for that matter) for a Work Capability Assessment, PLEASE wear a shirt if you are a man.
My wife persuaded me to wear a shirt (plain dark blue shirt with black jeans and soft boots, nothing special) to the benefit appeals medical assessment, I thought she was nuts thinking it would matter (as always I was wrong).
I entered the room, the doctor asked me to touch my toes, as always I could barely get passed me knees (I have super tight ham strings).
He pulled up the back of my shirt, pushed a few times on the soft muscle tissue of my back (which had never been the issue) and told me I could go!
Normally I’d have stripped to my boxer shorts and socks for that type of medical examination and been examined and questioned thoroughly.
I was once again disabled and incapable of work according to the DSS doctors!!!!
When I’d go to a GP after this I’d wear a shirt and it would be so much easier to get stronger pain medications, I was on 360mgs of DI-hydrocodeine a day before my back operation (maximum recommended dose is 240mgs a day) and have been on up to 200mgs of morphine a day: if you look professional they treat you better (book and cover comes to mind).
My First Online Business
I started selling adult lingerie and adult toys because of the markup (amazing markup), I considered selling pellet guns/bb guns before that (less markup). Year 2 (next April to April) I’d sold over £80,000 worth of stock, (I personally took £25K from the business) had to register for VAT and have never looked back.
I no longer sell products, I discovered search engine optimization (SEO) and it interested me (not as much as genetics, but I need something that interests me, not just work for money).
I switched my focus from selling physical products to offering SEO services (stopped offering SEO consulting in 2013) and have been doing well ever since. To keep sharp I also did affiliate marketing (kind of a money making hobby) and make thousands a month that way pure profits. I make thousands a month from the AdSense ads you see on this page (ads on multiple sites, not just this one). Also make money from selling digital products. So lot of ‘small’ money making ideas generating a very respectable income: in 2014 all my income comes from my network of websites.
Anyway, point is I went into business, self employed and lost money in my first financial year, but because I was working full time I could claim working tax credits and child tax credits.
It’s not difficult to setup a business online without having much money, when I sold adult products my biggest expense was a computer (£500), I pretty much broke even on the products I sold first 6 months (I was using AdWords and Overture for traffic in the couple of months I actually had a working site that first 6 months, so didn’t really make much). Year two, which I consider the first year really I’d discovered SEO and was seeing up to 8,000 unique visitors a day for free from search engines (Google loved my site until it banned it for link spamming, yes I made black hat SEO mistakes).
Setup a Business and Claim Working Tax Credits and Child Tax Credits
A person could in theory setup a business to make money from affiliate marketing and ad revenue (AdSense) from articles they write.
This article you are reading now will make me a little bit of money each month. People read the article and a small percentage will click the AdSense ads and I get a share of the revenue from Google AdSense (using Google AdSense is free).
This website was very easy and cheap to setup.
A domain can be registered for under $15 a year (Godaddy is good for non .co.uk domains, I use Fasthosts for .co.uk).
I use three virtual dedicated servers for my sites (have about 130 domains), costs about $150 a month, but you could pay for cheap hosting ($50 a year or less per domain, not checked prices for ages).
This website uses a CMS (content management system) called WordPress which is free and aimed at bloggers, minor changes (basically remove the monthly archives) and you have a general CMS rather than a blogging platform.
If you want AdSense ads (signup for AdSense, it’s free) like you see on this site I sell a WordPress theme with AdSense built in.
Total cost under $100 a year per domain (you only need one domain). You can in theory start for free by using a free WordPress blog at wordpress.org or Blogspot blog at blogger.com (both completely free, so no expenses at all to start).
Then you write your ass off and learn about search engine optimization so you can get free traffic to your site (takes a long time with a new site).
Don’t expect to make a lot of money quickly doing this, the idea is to have a business so you don’t have to claim job seekers allowance/income support and can then build up the money you make long term (or eventually find a suitable job). It’s got to look better on a CV to have a period of self employment than a period of unemployment.
Websites not your thing, try something else. Window cleaning, car washing, gardening, dog walking….. the list of potential self employed jobs is endless, choose something cheap to setup and if it picks up consider investing then.
Since you don’t need to make a profit to be self employed and be able to claim working tax credits and child tax credits it doesn’t matter if you make a lot of money, all that matters is you work full time.
And you never know you might find a great niche like I did and make a great living out of it. We bought a house in 2006 and had the mortgage paid off in around 5 years.
I added research about money details for this article in the comments, exact amounts people get on income support, working tax credits etc… under various scenarios so it makes sense.
Would love to hear others thoughts on this?