Universal credit and minimum wage floor - question.

Pedent

Icequeen99 wrote: »

Yes that's right. I used the insurance example because it was an expense which is what the other poster asked about. But same applies to tax and NI.

Understood. I raised the tax example because the payment schedule is something that HMRC directly controls, so it would be particularly unfair if it resulted in claimants losing money just because of their employment status.

Having looked around, it seems that there's something called a "Budget Payment Plan" that self-employed taxpayers can use to spread their tax payments, so perhaps this isn't as much of a problem as I first thought.

I'd guess that only a minority of affected claimants will find that out before they lose out though...

sanreeko

Hi I know this is an old thread but im so confused over the new system.
I work as a self employed courier through a company.
They pay me weekly on drops and petrol mileage, around £330 a week for (approx 200 drops at 50p and 500 miles at 46p a mile.) for a 40 hour week.

I do about 24,000 miles a year so can claim £4500(first 10000 miles at 45p) and a further £3500 (next 14000 miles at 25p) equalling about £8000 a year then about £720 a year for daily use of my hand held.

This brings my yearly earnings of £15840(48 weeks x £330) down to £7120(about £150 a week)

This is the amount that council tax, housing and tax credits are based on £150 earnings. Under the minimum income floor would that now change to minimum wage x 40 hours a week(6.19 x 40) equalling £247.50?

if so i will be a lot worse off! or would MIF be the £247.50 minus my expenses?

Sorry bit confusing i know!

spacey2012

Basically it is to discourage people from starting their own business.
another quality decision from this set of Etonian upper class idiots.

sammyjammy

spacey2012 wrote: »

Basically it is to discourage people from starting their own business.
another quality decision from this set of Etonian upper class idiots.

.......whilst earning next to nothing and topping up their unprofitable "hobby" business with benefits.

Anybody starting up a new business will be given one year to become profitable. Anyone that can't earn the equivalent to 35 hours at minimum wage after a years start up should either sign off or accept the consequences on their UC.

BigAunty

spacey2012 wrote: »

Basically it is to discourage people from starting their own business.
another quality decision from this set of Etonian upper class idiots.

I'm not sure that there are many welfare systems in developed countries that pay benefits perpetually to those with no or low profit businesses.

The Universal Credit proposal paper made clear that the changes are designed to tackle the current issue of long-term benefit dependency by the self employed who have failed to make even the national minimum wage from their activity.

Those starting their businesses from scratch get a year to get up and running, I believe.

Those who started their businesses years ago and still only make a pound or two an hour ought to wind them down and find regular employment - they will be better off and so will taxpayers.

dktreesea

sanreeko wrote: »

Hi I know this is an old thread but im so confused over the new system.
I work as a self employed courier through a company.
They pay me weekly on drops and petrol mileage, around £330 a week for (approx 200 drops at 50p and 500 miles at 46p a mile.) for a 40 hour week.

I do about 24,000 miles a year so can claim £4500(first 10000 miles at 45p) and a further £3500 (next 14000 miles at 25p) equalling about £8000 a year then about £720 a year for daily use of my hand held.

This brings my yearly earnings of £15840(48 weeks x £330) down to £7120(about £150 a week)

This is the amount that council tax, housing and tax credits are based on £150 earnings. Under the minimum income floor would that now change to minimum wage x 40 hours a week(6.19 x 40) equalling £247.50?

if so i will be a lot worse off! or would MIF be the £247.50 minus my expenses?

Sorry bit confusing i know!

Your net profit is less than the MIF, so, just for benefit calculation purposes you will be treated as earning the FT NMW (35 hours a week).

The DWP told me when I enquired that no self employed people would be migrated onto UC until April 2014. That is also our council's understanding when I asked them about possible housing benefit reductions.

dktreesea

BigAunty wrote: »

I'm not sure that there are many welfare systems in developed countries that pay benefits perpetually to those with no or low profit businesses.

The Universal Credit proposal paper made clear that the changes are designed to tackle the current issue of long-term benefit dependency by the self employed who have failed to make even the national minimum wage from their activity.

Those starting their businesses from scratch get a year to get up and running, I believe.

Those who started their businesses years ago and still only make a pound or two an hour ought to wind them down and find regular employment - they will be better off and so will taxpayers.

It's not that simple. You could have premises and stock, and employ a couple of people, all set up and profitable beyond the NMW FT equivalent income a few years back but going through the doldrums just now because of the recession. Closing down your business could have implications for people other than yourself.

Even for a sole trader, they could have a business loan. If they close down their business, it doesn't just mean the interest on the loan can't be offset against their PAYE income for tax purposes. The loan itself could become due and payable straight away. They could have a business lease on a vehicle whereby a condition is that the business remain a going concern. or premises on which they have a lease, but if they close down their business the rent of those premises is still due but cannot be offset for tax purposes against their PAYE income.

Icequeen99

sanreeko wrote: »

Hi I know this is an old thread but im so confused over the new system.
I work as a self employed courier through a company.
They pay me weekly on drops and petrol mileage, around £330 a week for (approx 200 drops at 50p and 500 miles at 46p a mile.) for a 40 hour week.

I do about 24,000 miles a year so can claim £4500(first 10000 miles at 45p) and a further £3500 (next 14000 miles at 25p) equalling about £8000 a year then about £720 a year for daily use of my hand held.

This brings my yearly earnings of £15840(48 weeks x £330) down to £7120(about £150 a week)

This is the amount that council tax, housing and tax credits are based on £150 earnings. Under the minimum income floor would that now change to minimum wage x 40 hours a week(6.19 x 40) equalling £247.50?

if so i will be a lot worse off! or would MIF be the £247.50 minus my expenses?

Sorry bit confusing i know!

If the MIF applies (it doesn't apply to all self-employed, only to those in the All work conditionality group), then it is applied to income - expenses - tax, NI and Pension contributions. So essentially to net income for DWP purposes. So you can't deduct the expenses from the 247.50. You can deduct some tax and NI but the wording is not clear and guidance awaited from DWP on whether it is a notional tax deduction or actual tax deduction.

IQ

Lilyann

Will self employed single parents be expected to work 35 hours per week in order to claim tax credits under UC?

BigAunty

dktreesea wrote: »

It's not that simple. You could have premises and stock, and employ a couple of people, all set up and profitable beyond the NMW FT equivalent income a few years back but going through the doldrums just now because of the recession. Closing down your business could have implications for people other than yourself.

Even for a sole trader, they could have a business loan. If they close down their business, it doesn't just mean the interest on the loan can't be offset against their PAYE income for tax purposes. The loan itself could become due and payable straight away. They could have a business lease on a vehicle whereby a condition is that the business remain a going concern. or premises on which they have a lease, but if they close down their business the rent of those premises is still due but cannot be offset for tax purposes against their PAYE income.

This is just standard business risk (and one that those who do not enjoy the cushion of benefits just factor into their business planning and operation). Dips in income, obligation to pay back loans, responsibility for staff - standard business operation.