Universal Credits - Self Employed

yellowlego

I have just started reading about the new universal credit and have registered under a new name to post here.

I fear i am going to be shot down but am sure i am not alone in what we do.
We are claiming tax credits because we can, however we have always lived a frugal life, had small holidays, never had a penny of debt and bought most things second hand.
Since the late 90's (iirc) there has been no savings limit on claiming tax credits, we have put our money in legal places so not to gain much interest ie ISA, pensions and premium bonds.
We live in tied accommodation (we have to live here with the job)
A couple of years ago we bought a little house with most of our money for our retirement or if anything happens with the job, it is let as a holiday cottage and only breaking even as a business.
We still have more than £16,000 in savings but we could easily spend some on being not so frugal, or updating our holiday cottage bringing us below the limit.
Will all our tax credits stop? I also get carers allowance for looking after our disabled child who gets DLA for the next 2 years at least.
I also run a separate business that only breaks even, mainly due to the amount of miles i drive as our house we have to live in is in the middle of nowhere!

BigAunty

yellowlego wrote: »

...
Will all our tax credits stop? ..

As per our previous comments, tax credits will no longer exist under UC and UC will have the same type of means testing now that is common to benefits like HB, CT, IS and so on.

So, past the transitional protection period, if you have capital above 16k, then you will not qualify for UC. I don't know how/if capital is included when it comes to the equity in a single property that you own but do not occupy rather than a second property like a buy to let landlord.

However, currently housing benefit and CT (means tested in a different way to tax credits) to someone who is not living in their own property but is in a rental property, for example, only pays in a small number of circumstances if the equity is less than 16, such as where there is a relationship breakdown and the property is up for sale, when someone is elderly and moves into a care home and so on. So there is a risk that the equity in it will compromise UC but you'd need to verify this further.

You don't have to 'spend' your capital in order to keep qualifying for benefits, you could add the money to your pension. You've also got time to either improve your business into a profit making one or wind it up as a non-money making time waster.

Look at the proposals for UC when it comes to Carers and those with disabilities rather than just for the self employed.

FBaby

yellowlego, you are the exact reason why this changes needed to come into place. You have received money from benefits which has allowed you to make investments and build savings. There is something morally very wrong about this. You defend it by saying you live frugally, but that is a choice you've made. Many families live frugally because they have no other choice to do so.

You didn't do anything illegally, just used the system to your advantage. According to you, you must have been able to put a serious amount of money to be able to save for a deposit AND still have £16K left unless I misunderstood and didn't come from every day savings. Thankfully, this misuse of benefits payments is about to finally stop and it is seriously about time.

yellowlego

Thanks for the advice, I suspected some hostility however we had most of the savings before claiming tax credits, 'the system' has just helped us hang on to them.
Without the uc we will be dipping into savings to live.

FBaby

I don't think my post was hostile, at least very tempered compared to how I feel. I did put a caveat that maybe the savings were not every day savings, but surely knowing that your post was likely to raise highbrows, I would have thought you would have made that clear in your message.

It doesn't make much a difference to the situation though, you've managed to do things thanks to benefits that many people not entitled would only dream of and that is clearly wrong. It isn't personal at all, just incredible that the system was set up to allow it to happen in the first place.

JoshuaJames

yellowlego wrote: »

Without the uc we will be dipping into savings to live.

If you did not have the savings then would you get more money?

BigAunty

yellowlego wrote: »

...
Without the uc we will be dipping into savings to live.

Unless you build up a decent profit making business that takes you out of the benefit system in the interim.

Most people who enjoy investments and rental property are those in good employment and aren't dependent on benefits. It's really only the quirk of tax credits that have allowed people with substantial means and/or running poor businesses to have a top up for what many thought would be in perpetuity.

Beveridge was against means testing. However, he was in favour of some time limits to be set and he wanted people to pay into mutual societies and have a more reciprocal relationship with the state.

Sixer

Self-employment is going to be a nightmare for UC. Largely due to reporting periods - to blend in with this (ludicrous) real-time system in which every employer in the country is apparently going to be reporting wages paid on time. Since income and expenses for the self-employed won't be even for monthly periods, claimants will be seriously disadvantaged. Read the research document at:

http://www.litrg.org.uk/Resources/LITRG/Documents/2012/08/SSAC_-_universal_credit_and_related_regulations_0712_%28final%29.docx.pdf

I'm self-employed. Thankfully, my household has too high an income for any welfare payment, but I can see how it would be impossible for me to accurately report smoothed income and expenses on a monthly basis. I'd go from four figure profits in some months to high three figure losses in others. But the losses wouldn't mitigate the profits under UC.

Pedent

FBaby wrote: »

yellowlego, you are the exact reason why this changes needed to come into place. You have received money from benefits which has allowed you to make investments and build savings. There is something morally very wrong about this. You defend it by saying you live frugally, but that is a choice you've made. Many families live frugally because they have no other choice to do so.

For what it's worth, I disagree.

For one thing, I think that it makes sense that we're taxed more at different points in our lives. Other things being equal, those without children, or with children who have left home, are able to contribute more of their income than those with the expenses associated with raising a family. We could achieve this with different income tax rates for people in different circumstances, but instead it's done by having a higher tax rate for everyone and providing various benefits (e.g. maternity allowance, child benefit, child tax credit) to those going through expensive stages of life, even if they don't need them in order to survive.

For another, although many benefits recipients live frugally, not all live equally frugally. Whatever level benefits are set at, if someone receiving benefits chooses to live more frugally than another benefits recipient, then I don't see why they should be penalised for that by having money taken away from them. If someone receives benefits that they don't need in order to survive, and chooses to live frugally and save them, then I think that's fair enough.

In saving and investing, yellowlego seems to have been acting responsibly, planning for retirement. If they're treated differently to other claimants with similar assets just because they don't live in the one home that they own then I think that would be unfair.

JoshuaJames

Sixer wrote: »

Self-employment is going to be a nightmare for UC. Largely due to reporting periods - to blend in with this (ludicrous) real-time system in which every employer in the country is apparently going to be reporting wages paid on time. Since income and expenses for the self-employed won't be even for monthly periods, claimants will be seriously disadvantaged. Read the research document at:


I'm self-employed. Thankfully, my household has too high an income for any welfare payment, but I can see how it would be impossible for me to accurately report smoothed income and expenses on a monthly basis. I'd go from four figure profits in some months to high three figure losses in others. But the losses wouldn't mitigate the profits under UC.

Yeah imagine what it will be like for SE people who have seasonal jobs. They will just fill in their forms and UC will assume that is what they will always earn right through tthe yr.