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    • kingsroad
    • By kingsroad 11th Aug 17, 10:50 PM
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    kingsroad
    Self employed - Universal Credit - Credit card use
    • #1
    • 11th Aug 17, 10:50 PM
    Self employed - Universal Credit - Credit card use 11th Aug 17 at 10:50 PM
    Hi

    I have a few questions about the being self employed on universal credit.

    I understand the income and monthly recording .

    My question is can I used a credit card (solely for work) and deduct the monthly payments as expenses. Things like a van, insurance ect.

    If not is my only option to pay a card off in full in the month? Obviously this would not work for a van.

    what are my options - surely a loan is the same as a credit card? Or is leasing a new van my only route.

    I have been self employed in the passed not on benefits however the monthly reporting for larger expenses are confusing me. The use of a credit card for work with DD payments monthly would be my preferred way but I am unsure if they count the day the credit card is used as the month the full balance has to be paid?

    I hope the above makes senses. My income will not fluctuate much but initially my expenses will as I set up so looking to find the best way to do this and spread that expenses monthly. For example my equipment and tools are costly at the start.

    Any help appreciated with accompanying reference if you have it.
Page 1
    • Icequeen99
    • By Icequeen99 11th Aug 17, 10:59 PM
    • 3,414 Posts
    • 2,320 Thanks
    Icequeen99
    • #2
    • 11th Aug 17, 10:59 PM
    • #2
    • 11th Aug 17, 10:59 PM
    How you pay the expense doesn't matter - as long as you have proof of the expense e.g. the receipt.

    You will need to make sure it is a deducible expense for universal credit purposes as some things you can't deduct and you can't deduct capital purchases but otherwise as I say it doesn't matter how you pay for it.

    IQ
    • kingsroad
    • By kingsroad 11th Aug 17, 11:27 PM
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    kingsroad
    • #3
    • 11th Aug 17, 11:27 PM
    • #3
    • 11th Aug 17, 11:27 PM
    Thanks IQ -
    What confuses me is this
    " Allowable business costs are deducted in the month in which they are paid for. For example, if you pay £360 for your van’s annual insurance in June, then you would be allowed to include all of the £360 as a business expense within June’s accounts. If however you renewed your van’s insurance but paid on a monthly basis then you would only be able to include £30 per month as a business expense."

    If it does not matter how you pay for the expense why would the above be true? Unless the above is talking bout your personal bank instead?
    • Icequeen99
    • By Icequeen99 12th Aug 17, 7:41 AM
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    Icequeen99
    • #4
    • 12th Aug 17, 7:41 AM
    • #4
    • 12th Aug 17, 7:41 AM
    Thanks IQ -
    What confuses me is this
    " Allowable business costs are deducted in the month in which they are paid for. For example, if you pay £360 for your van’s annual insurance in June, then you would be allowed to include all of the £360 as a business expense within June’s accounts. If however you renewed your van’s insurance but paid on a monthly basis then you would only be able to include £30 per month as a business expense."

    If it does not matter how you pay for the expense why would the above be true? Unless the above is talking bout your personal bank instead?
    Originally posted by kingsroad
    But those examples do match what I said - it doesn't matter how you pay it matters when the expense is paid. With a credit card, the expense is paid when you pay the third party, not when you pay your credit card provider. So when you pay the van insurance to say direct line of £360 that is the date on which it is treated as an expense - whether you then have to pay your credit card and when you do that is irrelevant.

    So in that example, if you used your credit card to pay your vans insurance on 10 June - then that is an expense that you deduct in the assessment period that 10 june falls. You deduct the whole £360 pounds because that is what you paid out. It would be exactly the same if you paid with debit card or cash etc.....

    However, if on the 10 June you paid only an installment of £30, whether by credit card or direct from the bank. then you deduct only £30 as an expense and in the next assessment period you deduct another £30.

    I'm struggling a bit to understand your point.

    IQ
    • kingsroad
    • By kingsroad 12th Aug 17, 1:45 PM
    • 5 Posts
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    kingsroad
    • #5
    • 12th Aug 17, 1:45 PM
    • #5
    • 12th Aug 17, 1:45 PM
    Maybe im not being clear. You can purchase a van with set monthly payments by means of a loan every month for expenses.

    Can you purchase it on a credit card and pay a monthly direct debit as expenses each month?

    It appears not that buying it with a credit card is the month it must be included? I want to set a monthly payment for the card to even out my expenses month to month.

    Maybe a lease van is the only option?

    I have about 3k of expeneses and i dont want that coming off one month as they will all be bought with the credit card. I thought I could use the card to purchase and pay that off on a monthly basis?

    Hope that is clearer.
    • Icequeen99
    • By Icequeen99 12th Aug 17, 3:02 PM
    • 3,414 Posts
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    Icequeen99
    • #6
    • 12th Aug 17, 3:02 PM
    • #6
    • 12th Aug 17, 3:02 PM
    Maybe im not being clear. You can purchase a van with set monthly payments by means of a loan every month for expenses.

    Can you purchase it on a credit card and pay a monthly direct debit as expenses each month?

    It appears not that buying it with a credit card is the month it must be included? I want to set a monthly payment for the card to even out my expenses month to month.

    Maybe a lease van is the only option?

    I have about 3k of expeneses and i dont want that coming off one month as they will all be bought with the credit card. I thought I could use the card to purchase and pay that off on a monthly basis?

    Hope that is clearer.
    Originally posted by kingsroad
    Ok, i see what you are saying. No you can't do that with the credit card, monthly payments to the credit card would not be the expense for an item (assuming it was an allowable expense), it would be the amount of the item when it was purchased.

    A van would be an allowable expense and you can choose to do that or use the flat rate expense scheme http://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/calculating-income-from-self-employment/

    But it terms of using a credit card to try and even out expenses across a year the answer is no.

    More detail here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/618963/admh4.pdf which explains what expenses are allowable as capital repayments of loans are not allowed only the interest up to £41 per period.

    IQ
    • kingsroad
    • By kingsroad 12th Aug 17, 3:25 PM
    • 5 Posts
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    kingsroad
    • #7
    • 12th Aug 17, 3:25 PM
    • #7
    • 12th Aug 17, 3:25 PM
    Ok thanks for that info.
    It seems that to lease a van is my only option and try to lease equipment which seems mad.

    As there is no way to carry forward the cost of a used van or equipment for more than one month.

    My first month would be an outlay of 5k then following months I would have almost no expenses minus fuel. I must be missing something.
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