Working Tax Credit Stopped

Oldernotwiser

HappyMJ wrote: »

Is that all...oh well that's OK then. I currently work 30 hours a week have 12 weeks annual leave and earn a profit averaging £37.50 per week. I'm always looking for more work so if all they want is just to see proof of that then I don't mind.

Hopefully this will be the sort of situation which is looked at very closely!

HappyMJ

Oldernotwiser wrote: »

Hopefully this will be the sort of situation which is looked at very closely!

Why? By what has been said it'll be OK. It's either me claiming some tax credits whilst doing some low paid work to keep my skills up or reduce my hours to under 16 and claim JSA.

Oldernotwiser

HappyMJ wrote: »

Why? By what has been said it'll be OK. It's either me claiming some tax credits whilst doing some low paid work to keep my skills up or reduce my hours to under 16 and claim JSA.

You're hoping for one interpretation of the rules, I'm hoping for the other.

Personally, if you're claiming that you're only earning the equivalent of 6 hours at NMW, I would think that you should be claiming JSA.

We'll both have to wait and see how it pans out.

Lou76

Oldernotwiser wrote: »

You're hoping for one interpretation of the rules, I'm hoping for the other.

Personally, if you're claiming that you're only earning the equivalent of 6 hours at NMW, I would think that you should be claiming JSA.

We'll both have to wait and see how it pans out.

Totally agree.

Seems wrong to me that people, on here, are telling others to set up a bogus Ebay/Avon etc "business" in order to avoid JSA, but allowing maximum WTC/HB/CTB etc.

It's about time the true entrepreneur went back to basics; i.e. using savings/business loan to fund them.

Sixer

HappyMJ wrote: »

Is that all...oh well that's OK then. I currently work 30 hours a week have 12 weeks annual leave and earn a profit averaging £37.50 per week. I'm always looking for more work so if all they want is just to see proof of that then I don't mind.

When you say "always looking for more work" do you mean "marketing your business" or "applying for employed vacancies"?

Because the proposals are for conditionality as JSA conditionality, so unless it's the latter, you'd likely be sanctioned (assuming the sanction regime is similar).

HappyMJ

Sixer wrote: »

When you say "always looking for more work" do you mean "marketing your business" or "applying for employed vacancies"?

Because the proposals are for conditionality as JSA conditionality, so unless it's the latter, you'd likely be sanctioned (assuming the sanction regime is similar).

"applying for contract jobs"...I put in several applications every week.

Sixer

BigAunty wrote: »

The proposal paper says 'we are considering introducing a floor of assumed income from self-employment'.

Certainly, pressure groups have also interpreted it the paper to that a notional income using the NMW will form part of the remaining means tested benefits, whether or not this income is achieved.

http://www.family-action.org.uk/section.aspx?id=13397

http://www.farmersguardian.com/home/business/business-features/self-employed-to-lose-out-on-universal-credit/38266.article

http://news.uk.msn.com/politics/articles.aspx?cp-documentid=159933489

Note this exchange by ministers

"Mr Timms said: "The Low Incomes Tax Reform Group has said tax credits today support self employment much better than the proposals for universal credit will in the future. This is because universal credit will assume people are earning at least the minimum wage which is completely unrealistic in the early years of self employment.
"Will you look again at this particular problem with universal credit, at least for the first year or two of somebody's self employment?"

Employment Minister Chris Grayling said: "We will be monitoring very carefully how decisions we take around universal credit work. But as you know, whilst we want to support and encourage self employment at the same time we cannot allow people to shelter themselves on benefits under a false excuse of being self employed."

The white paper (had its second reading now) says:

Some self-employed people under Tax Credits report very low levels of income. We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported.

This was interpreted by many (including me) when first published as "we'll give you less money and pretend you earn more than you do". Quite a few NGO groups campaigned about this and asked for clarification and the latest guide notes, produced after this indicate this isn't the case, but that conditionality will apply for the remaining hours. In other words you will have to demonstrate job-seeking for that period of (assumed) time to make up your income to 35 hours x NMW. You've read those notes, BigAunty, so you know they are pretty clear. The only thing they're not clear about is the number of hours at NMW lone parents or second parents from couples will need to achieve (20? 16?).

You'll notice Chris Grayling doesn't actually say one or the other - he says UC won't allow people to claim UC on the basis of false self-employment without question - not that they'll get less money. According to the latest briefing notes, it's clear that the floor of assumed income in the white paper refers to conditionality.

Of course, this may change, but the current proposal for low-income self-employed is to introduce conditionality NOT reduce levels of benefit.

Icequeen99

Sixer wrote: »

The white paper (had its second reading now) says:

Some self-employed people under Tax Credits report very low levels of income. We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported.

This was interpreted by many (including me) when first published as "we'll give you less money and pretend you earn more than you do". Quite a few NGO groups campaigned about this and asked for clarification and the latest guide notes, produced after this indicate this isn't the case, but that conditionality will apply for the remaining hours. In other words you will have to demonstrate job-seeking for that period of (assumed) time to make up your income to 35 hours x NMW. You've read those notes, BigAunty, so you know they are pretty clear. The only thing they're not clear about is the number of hours at NMW lone parents or second parents from couples will need to achieve (20? 16?).

You'll notice Chris Grayling doesn't actually say one or the other - he says UC won't allow people to claim UC on the basis of false self-employment without question - not that they'll get less money. According to the latest briefing notes, it's clear that the floor of assumed income in the white paper refers to conditionality.

Of course, this may change, but the current proposal for low-income self-employed is to introduce conditionality NOT reduce levels of benefit.

That is incorrect. There are two issues - the first is related to conditionality and that is the briefing that has been produced.

The second is the minimum income floor for the self-employed, which is set out in Schedule 1 of the Welfare Reform Bill. The original intention as you noted above in the White Paper was that those who were self-employed would be deemed to earn x number of hours x minimum wage.

As you also noted, campaign groups challenged this. Following discussion in the committee and report stage of the Lords, Lord Freud clarified that the thinking had changed and the minimum income floor would now be based on earnings of someone with similar circs who was employed. It is likely there will be an exception for those starting out in business and for those who have a bad period (which is one of the problems the DWP have in trying to sort the new rules out).

But it is separate from conditionality.

Have a look at the discussion in report stage just this week here: http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/111214-0003.htm scroll down to Amendment 32.

Lord Freud said, However, we believe that different issues arise in relation to self-employment. We think that it is right in principle to apply a minimum income floor to claimants who choose to be self-employed but whose earnings do not make them financially self-sufficient. I confirmed in Committee that the floor will not be based on the hours claimants work. We assume that claimants' earnings are at a level that we would expect from claimants with similar circumstances in employed work.

Claimants will not be forced to take reduced benefit payments by accepting the minimum income floor. Self-employed claimants will have the choice in universal credit. Some will choose to continue solely with their

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existing activity with the expectation of increasing their earnings. They will accept the minimum income floor. Those who do not will need to satisfy conditionality requirements.


As you can see, they are most certainly planning to have a deemed earnings for the self-employed, although as I say it is expected there will be exceptions at the start of a business and also later on if there is a bad period after a business has been doing well. But outside of those periods the self-employed will be deemed to have earnings equal to an employed person with similar circumstances. If they don't accept this, then they will be subject to conditionality.

IQ

Sixer

Icequeen99 wrote: »

That is incorrect. ...

Claimants will not be forced to take reduced benefit payments by accepting the minimum income floor. Self-employed claimants will have the choice in universal credit. Some will choose to continue solely with their existing activity with the expectation of increasing their earnings. They will accept the minimum income floor. Those who do not will need to satisfy conditionality requirements.


As you can see, they are most certainly planning to have a deemed earnings for the self-employed, although as I say it is expected there will be exceptions at the start of a business and also later on if there is a bad period after a business has been doing well. But outside of those periods the self-employed will be deemed to have earnings equal to an employed person with similar circumstances. If they don't accept this, then they will be subject to conditionality.

IQ

Thanks for the brilliant info.

I would say, though, aside from giving low-income self-employed UC claimants a choice (less benefits OR conditionality), this is exactly what I was saying - these people won't be compulsorily assessed and receive benefits on a notional, not actual, income.

Icequeen99

Sixer wrote: »

Thanks for the brilliant info.

I would say, though, aside from giving low-income self-employed UC claimants a choice (less benefits OR conditionality), this is exactly what I was saying - these people won't be compulsorily assessed and receive benefits on a notional, not actual, income.

It certainly doesn't appear that it will be a compulsory assessment, even more complication and better off calculations.

IQ