Universal Credits - Self Employed

shedboy94

Sixer wrote: »

Actually, people who know how to manipulate the benefits system are far from thick and there are a number of them. Additionally, they are one of the specific targets of this reform.

Despite much of the stuff and nonsense spouted about the self-employed paying less proportional tax than the employed, when you actually look outside of the entitlement to benefits issue, the only real way to pay significantly less tax than PAYE as a self-employed person is to falsify your tax return. And as I keep saying, that's neither a tax rates nor a welfare issue. It's a crime. Nothing more complicated than that.

Of course the s/e pay less tax.......after deducting all the allowable expenses that PAYE can't - petrol, vehicle depreciation, phone calls, broadband......etc. Also, what about all the sole traders who set up Ltd companies, pay themselves an amount just below the PAYE threshold, then take dividends that are taxed at a lower rate than PAYE......?

dktreesea

Sixer wrote: »

No, BigAunty. They are saying the self-employed must have MONTHLY accounting periods (whilst still maintaining an ANNUAL accounting period for HMRC). They must produce simple income/expenditure sheets for each month and the "profit" for an individual month will be used to calculate UC for that month. Losses cannot be carried forward to another month.

The "profit" that is therefore declared for UC over the course of 12 months is very likely for many people to be different to the taxable annual profits declared to HMRC in self-assessment.

1) it will disadvantage many claimants who have large annual expenses (eg taxi drivers and hire and reward insurance) or those who has an individual problem with income (eg a late paying client) or those who simply have to wait for profits (ie small scale builders/developers)

2) it's completely open to manipulation by the less charming of claimants who will organise invoicing out and in to their own advantage - so no improvement on the current 30hr-hobby-business-WTC-fiasco we have now

Edited to add: and quite how capital allowances will play into all of this (or monthly vs annual pension contributions for that matter, which I do based on profit annually, for example) I simply can't imagine.

For housing benefit calculations, losses are set to zero, rather than treated as minus, income and can't be carried forward at the moment, so no change there.

It may well disadvantage people who can't average their expenses over the year - though not those that receive most of their revenue at set times, because under the new system they could well become eligible for housing benefit for the 9 or 10 months of the year they have low revenues, and only lose it for the two months of bumper revenues ,e.g. over Christmas, or over the summer if they have a business supported by tourism, say, even if, over the full year, they made enough profit to qualify for very little housing benefit.

I don't see a problem with producing monthly accounts, - most self employed people are at least entering all their revenue and expenditure into some kind of notebook or spreadsheet. It's just a matter of adding up the outgoings offset by any money they have received.

charlotte4940

Please could someone help with my situation

I work employed 37 hours per week earning £16750 per year. my partner works 20 hours per week self employed earning £3000 per year. we are not entitled to hb,ctb or wtc but are entitled to child tax credit and help with childcare costs.

with UC coming in how would i be affected? would my partner have to prove he is working 20 hours per week or would they say you should be earning a certain amount and this is what we will use as your income? im worried they will say we are not entitled to help with childcare costs if we cannot prove he works 20 hours per week which would mean he would have to stop working as we would not be able to afford childcare and apply for hb and ctb?

how can they take help with childcare costs away from someone to prevent them from work and making them unemployed?

charlotte

BigAunty

charlotte - your husband earns £3 an hour, less than half the NMW. The UC sets an expectation that the recipient can earn the NMW from it and sets that a notional income. How old are your children? How long has your husband been in business?

John_Pierpoint

It is looking like the government might shoot itself in the foot if it kills off "hobby businesses".
However we all know that there is an unwritten bargain between the unemployed and the government. Unless one is a complete disaster it makes more sense to scratch say £30 a day profit as a self employed van driver, than rot on the dole claiming £60 a week.
At least one is mobile with a set of wheels, hearing about other opportunities and able to bring the weekly shopping back from the cheapest supermarket.
The quid pro quo is that the self employed person disappears from the unemployment statistics.
Why do we think that the value added per working person in the UK is falling, but official unemployment has not risen as far or as fast as in other more minor recessions? (early 80s & early 90s)

Isn't the undertaking to make work pay better than benefits?

One person's child allowance, might well be someone else's self employment/working credit.

charlotte4940

do we know how much they expect a self employed person to earn. He only works 20 hours per week on average so how can they expect him to bring in a full time wage!

My child is 1, i was reading on the dwp website that the rules for UC will allow you to claim for childcare regardless of how many hour you work whereas now you have to be working a minimum of 16 hours each to claim for childcare. Does that mean I will still be entitled to it?

He has been in business for about 1.5 years he works for someone who is self employed and was asked to go self employed so he could pay him. he does not actually own as business but works for someone on a self employed basis.

shedboy94

charlotte4940 wrote: »

Please could someone help with my situation

I work employed 37 hours per week earning £16750 per year. my partner works 20 hours per week self employed earning £3000 per year. we are not entitled to hb,ctb or wtc but are entitled to child tax credit and help with childcare costs.

with UC coming in how would i be affected? would my partner have to prove he is working 20 hours per week or would they say you should be earning a certain amount and this is what we will use as your income? im worried they will say we are not entitled to help with childcare costs if we cannot prove he works 20 hours per week which would mean he would have to stop working as we would not be able to afford childcare and apply for hb and ctb?

how can they take help with childcare costs away from someone to prevent them from work and making them unemployed?

charlotte

Why isn't he working more hours, or taking on a 2nd job?
It costs more to pay for childcare costs because at the moment he earns £3000??? so obviously pays no tax, however you get money towards childcare costs. If the childcare costs were withdrawn then the government would save money as they wouldn't be paying out the money and they also wouldn't be losing any tax, as he doesn't pay any.

What does he do for 20hpw that only earns him £58pw?

charlotte4940

he is only working 20 hours because that is all available! if there was more hours he would take them. Whats the alternative? going onto job seekers and start claiming housing benefit and council tax benefit!!

he pays national insurance but does not pay tax. Hes a roofer and doesn't work dead on 20 hours per week its an average one month he could earn £500 and the next month there could be no work in. if there is rain it means no work and if customers dont want to spend there is no income. he also has no expenditure so all his income is profit.

shedboy94

charlotte4940 wrote: »

he is only working 20 hours because that is all available! if there was more hours he would take them. Whats the alternative? going onto job seekers and start claiming housing benefit and council tax benefit!!

he pays national insurance but does not pay tax. Hes a roofer and doesn't work dead on 20 hours per week its an average one month he could earn £500 and the next month there could be no work in. if there is rain it means no work and if customers dont want to spend there is no income. he also has no expenditure so all his income is profit.

Doesn't sound like his hours average to a min 16 hpw then, so you shouldn't be claiming for CCC

BigAunty

charlotte4940 wrote: »

he is only working 20 hours because that is all available! if there was more hours he would take them. ...

What!! Why is a roofer grossing £3 an hour when they have no expenses?!!

Can he find another roofer to offer his services to?

I've paid £800 for an afternoon's work with a roofer before and 6k for a 5 day re-roof. I've rarely been able to pay any type of semi skilled or skilled tradesman anything less than about £100 a day and often much higher.

I'm not familiar with arrangements in the construction industry but the HMRC have produced guidelines to detail whether a person is actually self employed or not. Is he really self employed or is he some kind of disguised employee? The HMRC crack down on those whose arrangements are really one of an employee under the IR35 regulations.

Perhaps he should be an employee receiving at least the NMW? Or set up his own company to repair roofs, gutters, find his own customers.

http://www.hmrc.gov.uk/working/intro/empstatus.htm

Employment status: basic checks to help you decide

You can usually work out your employment status by asking a few straightforward questions.

You are probably self-employed if you:

• run your own business and take responsibility for its success or failure
• have several customers at the same time
• can decide how, when and where you do your work
• are free to hire other people to do the work for you or help you at your own expense
• provide the main items of equipment to do your work

You are probably employed if you:

• have to do the work yourself
• work for one person at a time, who is in charge of what you do and takes on the risks of the business
• can be told how, when and where you do your work
• have to work a set amount of hours
• are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed