Universal credit & Single mum

HappyMJ

BigAunty wrote: »

So those dawdling along with poxy mini businesses really need to consider the risks going forward and may need to step up their game to ensure that they are earning £6 an hour from their endeavors, not a few quid a month.

There is no way my poxy mini business providing a valuable service can ever make a profit equally or exceeding minimum wage. I wish it could but it just can't. I would have to double my rate and there are plenty of other people who will undercut me therefore making it not worth my while. I would have to quit and go onto JSA increasing the governments unemployment figures.

pinklipy

I'm confused lol! Why would someone not want to earn a wage but work? Are they not just working for nothing then? Or does that mean that some SE are working the minimum in order to recieve full benefits while not actually earning any ££? Not sure I see the point.

Another question: when tax credits talk about "disregards" what does that actually mean? As in, if I earn £6000 or £9500 in a tax year my amount of tax credits would remain the same as a lone parent? Just I keep reading something about them disregarding £10000 in a change of circumstance's.

Sorry if I make no sense!

BigAunty

pinklipy wrote: »

I'm confused lol! Why would someone not want to earn a wage but work? Are they not just working for nothing then? Or does that mean that some SE are working the minimum in order to recieve full benefits while not actually earning any ££? Not sure I see the point.

I can't really answer this - there have been separate threads on self employment and the Universal Credit on MSE - dig them out to get both sides of the argument.

My opinion on self employment and tax credits is that they kill true entreprenurial spirit and merely prop up ailing enterprises. Business is about risks and rewards. Benefits which should be about being a temporary springboard into self sufficiency.

However, the receipt of means tested benefits for the self employed is open-ended meaning there's not always the incentive to build the business or even bother to find out if it's a feasible way to earn a living. It's taken away the risk and reduced the appetite for the reward element of being truly self employed.

So under UC they seem to have changed the emphasis from the SE demonstrating that they work x amount of hours into encouraging them to earn x amount of profit. Which is the correct way of doing it.

I was always faintly depressed by reading posts on forums by the self employed who were keen to understand how they could maximise the time spent on their 'businesses' and minimise the profits to better qualify for tax credits, etc. This is completely anathema to good business practice.

pinklipy

I see what you mean and agree with you. Does that mean that under UC the SE will actually have to earn minimum wage for the hours worked or that the amount will be put in their claim form wether they've made the amount or not?

BigAunty

pinklipy wrote: »

Does that mean that under UC the SE will actually have to earn minimum wage for the hours worked or that the amount will be put in their claim form wether they've made the amount or not?

I'm not 100% sure but I think that it is a notional income, meaning they will be treated as if they earn the NMW, whether or not they do.

I assume (but don't know for fact) that there could be a period of grace for a newly established business before the threshold is applied.

In a way, it's a shame because self employment lends itself well to those who cannot commit to regular employment, such as those with commitments like caring, children or who are less attractive to conventional employers because of health issues, etc.

However, I guess the principles of eligibility are changing because of the abuse of the tax credit system by the self employed. It's clear on the MSE forums that claimants blithely set up businesses without performing the slightest bit of business planning and do it cynically (though legitimately) in order to qualify for tax credits rather than any real drive to provide a service and make profits.

Vejovis

pinklipy wrote: »

I'm confused lol! Why would someone not want to earn a wage but work? Are they not just working for nothing then? Or does that mean that some SE are working the minimum in order to recieve full benefits while not actually earning any ££? Not sure I see the point.

Another question: when tax credits talk about "disregards" what does that actually mean? As in, if I earn £6000 or £9500 in a tax year my amount of tax credits would remain the same as a lone parent? Just I keep reading something about them disregarding £10000 in a change of circumstance's.

Sorry if I make no sense!

there a some people, i stress some, who will set up a business ebay being the favourite and put down that they are working 30 hours, when in fact they might sell one or two things taking just a few minutes to sort out. they dont need to make a profit because WTC pays them the maximum amount, which is more than JSA and they dont have the jobcentre nagging them to get a job.

under uc they will get £213 knocked off what they will be entitled to because thats the value of a full time nmw job

debtmess

As much as I love the new ideas, how will it work in some area's ie where private rents are much higher? I have a 4 bed house and 4 children here 1 girl (17) 3 boys (8,6 and 5) my rent is £1200pcm with an idea such as above by them time anyone with higher rents and council tax have paid these (in my area off top of head that would amount to 1400 ish pcm though i am slightly off by around £50 i think, thats surely going to make it much harder for some to cope (if this makes any sense)

Before i get jumped on I am doing a college course now along with placement in the hope I can find work, my youngest 'takes' me into the bottom group as i am a carer for my youngest son, I am worried about the effects of the cap on those with higher rents

Becles

So if you are a self employed lone parent earning more than minimum wage, you've got nothing to worry about?

BigAunty

You might get fuller responses if you post your concerns about UC and impact on housing benefit for high rent areas in a separate post. Go and look at the proposal papers if you can - much better than hearing second hand information.

Remember that these are proposals, not yet approved and ratified as policies so might get changed or thrown out.

Here's a bit of info here

"The measure will be introduced in 2013 and will be based on the median earned income after tax and national insurance for working families – estimated to be about £500 a week.
The Treasury claims the cap will apply to about 50,000 workless families, who will lose an average of £93 a week. The Tories claim that some families will lose as much as £300 a week; asked how many, a spokesman would only say this was at "the top end".
The limit will apply to the combined income from the main income benefit, other means-tested benefits such as housing and council tax, as well as child benefit, child tax credits and carer's allowance.
Non-cash benefits, such as free school meals, will not be affected and households with a disability living allowance claimant will be exempt in recognition of the extra living costs incurred by those with a disability."

http://www.guardian.co.uk/politics/2010/oct/04/george-osborne-cap-welfare-payments

There's a DWP document here about it

"modelling suggests that around 50,000 households on out of work benefits will stand to have their benefits reduced by the policy, subject to their circumstances and eligibility for transitional protection. This is roughly 1% of the out-of-work benefit caseload. Broadly, the cap will affect large families with several children, who will be entitled to a significant amount of Child Tax Credit and who might also live in larger family homes and so be entitled to high levels of Housing Benefit; or households in high rent areas receiving large Housing Benefit payments. The Government is looking at ways of easing the transition for families and providing assistance in hard cases.

Approximately 40% of households who are likely to be affected by the cap will consist of five or more children whilst over 80% will consist of 3 or more children....


At lower percentiles of the market, the cap will still make some parts of the country unaffordable on Housing Benefit alone for larger households receiving benefit and it is difficult to accurately predict what will happen to the affected households, as it depends on households’ behavioural responses and on the availability of accommodation. The impact on those affected will be that they will need to make a choice between a number of options including starting work, reducing their non-rent expenditure, making up any shortfall in Housing Benefit using a proportion of their other income or moving to cheaper accommodation or area.

However, the impacts of the cap on women, can be mitigated by the support available to help lone parents move into work and become eligible for Working Tax Credit which will make them exempt from the cap. (As stated we expect the vast majority of single women affected by the cap to be lone parents and so eligible for this help.) Lone parents can become eligible for WTC when working 16 hours or more a week, so putting them at an advantage to those who have to work at least 30 hours a week. The Department is considering what mitigation might be appropriate once Working Tax Credit has been incorporated into Universal Credit. "

http://www.dwp.gov.uk/docs/eia-benefit-cap-wr2011.pdf

Sixer

HappyMJ wrote: »

There is no way my poxy mini business providing a valuable service can ever make a profit equally or exceeding minimum wage. I wish it could but it just can't. I would have to double my rate and there are plenty of other people who will undercut me therefore making it not worth my while. I would have to quit and go onto JSA increasing the governments unemployment figures.

As I read it, no you won't have to quit. Or rather, you'll be entitled to UC whilst maintaining your business. But you will be required to "actively look" for better paid work. If you can't find it, though, you'll still be paid UC.