UC and selfemployed

Billy_two_speakers

Thought I would post this here and tax credits

Tax Credits V.. UC and income floor, many people some disabled work self employed and have done for ages many not making much money so get a top up in WTC.

Do you know when you move to Universal Credits after year one "Income Floor" will come in and making little money or a 2nd year loss won't be allowed, they will work out an income for you using there figure as the starting point.

If you go bust and start again you will start with income floor sums straight away.

The Income floor could be 35 hrs minimum wage todays that £11,400 a year

more here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209511/universal-credit-toolkit-quick-guide-self-employment.pdf

I posted this thread as I have read here and other forums people talk of being self employed not making much but get by, with tax credits

Are you in that postion ? did you know of the change ?

M.Johnson_2

I am trying to understand what it will be like when UC replaces the current system.

Take an example of a small family at the moment with 2 kids.

If this family was working 30hrs week but making no profit from the self empolyment, they would get about £100wk WTC, and CTC also about £100. They would get £30wk CB and say their rent was about £260wk as long as still no profit every year from their 'business' then they would get most of that paid. Depending on the area they may get help with council tax and a few other 'benefits' which will bring them in at around the benefit cap of £500wk.

If the family was not working at all it would be about the same but the JSA would replace the WTC and it would be a little more, but not much. So they may lose that anyway if they are near the £500 cap. But if they were on JSA they would not only have to sign every 2 weeks but come under increasing pressure to go on a work program or something, and all the other reasons why as many families do many choose tomove from JSA onto WTC and not have all the hassel of JSA.

So when UC replaces the current system it should put an end to all those who choose to move from JSA onto WTC but do not make a profit. Either they will have to make at least min wage per hr for 30hrs, or their benefits will be cut as much as if they were earning that much.

Surely most would choose to move back to the first option and get the most benefits again?

earthbound_misfit

M.Johnson wrote: »

So when UC replaces the current system it should put an end to all those who choose to move from JSA onto WTC but do not make a profit. Either they will have to make at least min wage per hr for 30hrs, or their benefits will be cut as much as if they were earning that much.

Surely most would choose to move back to the first option and get the most benefits again?

What do you mean by "the first option"? Working on a business that makes no profit and getting WTC? Either way they will be subject to tougher conditions, proving they work 35hrs (it's changing to 35) and also jumping through jobcentre hoops/workfare etc. as they will be expected to find better paid work. So it would probably be impossible to keep the business running at that level/not make a loss due to attending work placements, daily signings and all the rest that currently only comes with JSA.

Personally I can see it's ridiculous to be able to essentially switch benefits by using a non-sustainable, even bogus, business. The problem is that it's catching an awful lot of genuine people who wouldn't be in employment otherwise.
There's no consideration of the alternative if the person wasn't running a small business. I mean, I'm currently unemployed due to ill health, have been looking at going self-employed. Say I managed to make £3/hour on average - I'd be costing the state a lot less that on ESA. Actually I'd cost them less even if I made no profit, as I'm single and childless so would be on basic WTC + HB/CTB at most. My chances of employment are zilch at the moment until I'm a bit better.
But nooooo, will be assessed as earning min. wage to make sure I'm available for workfare...

M.Johnson_2

Yes they will be subject to tougher conditions, but someone cant just choose to make their S.E business earn well over £400wk profit. No matter how hard they work.

Suarez

M.Johnson wrote: »

Yes they will be subject to tougher conditions, but someone cant just choose to make their S.E business earn well over £400wk profit. No matter how hard they work.

£400 per week is £20,800 per annum.

35 hours at minimum wage is £11,266....

M.Johnson_2

Suarez wrote: »

£400 per week is £20,800 per annum.

35 hours at minimum wage is £11,266....

Yes its x2 for a couple.

Percy1983

M.Johnson wrote: »

Yes they will be subject to tougher conditions, but someone cant just choose to make their S.E business earn well over £400wk profit. No matter how hard they work.

But usually at that point it won't be taking up 35 hours of there time, if it is they are doing it wrong.

My business doesn't earn enough to pay me minimum wage for a year, but it also doesn't take up much of my time so I do it on the side of full time work.

M.Johnson_2

Percy1983 wrote: »

But usually at that point it won't be taking up 35 hours of there time, if it is they are doing it wrong.

My business doesn't earn enough to pay me minimum wage for a year, but it also doesn't take up much of my time so I do it on the side of full time work.

So are you saying after UC is replacing everything else, its OK for those currently on WTC to continue to opperate their business at a loss every year? And just continue to satisfy conditionality and look for other work.

PasturesNew

For those that are making a loss/breaking even just to claim the WTC etc, then their loss to the world of commerce will only mean that those that are REALLY relying on the income and trying to build a business will benefit from decreased (subsidised) competition.

While somebody doesn't have to pay for their lifestyle from their income/profits, it forces down profit margins for those that aren't subsidised.

It's a good thing imho.

Percy1983

Well my point is if a business is taking up 35 hours a week and not making anything near minimum wage then its clearly being operated wrong.

As said my business does clear more than minimum wage, its just not a year round operation so wouldn't give me enough to survive.

As it is my business is just breaking even at the minute as I keep re investing all profits in more equipment.

No business should be allowed to run at a loss and people should be paid to run said businesses, so close the loop holes which allow people to do so.

M.Johnson_2

PasturesNew wrote: »

For those that are making a loss/breaking even just to claim the WTC etc, then their loss to the world of commerce will only mean that those that are REALLY relying on the income and trying to build a business will benefit from decreased (subsidised) competition.

While somebody doesn't have to pay for their lifestyle from their income/profits, it forces down profit margins for those that aren't subsidised.

It's a good thing imho.

Of course its a good thing, but what will be the effect on the wider ecconomy at a time when the ecconomy is on rocky ground already?