Universal Credit - Other Property

sall1

Universal Credit - just wanted to ask - at present i get rental income from a property i let out which i declare for tax credit purposes - my question is how does this work under universal credit's 'capital' rules because i would still have to declare the rental income but how is the property dealt with under the new system? as Universal credit system would also 'deem' that the asset yields an income, which it takes into account when calculating your entitlement! - therefore you would be hit twice - once by a reduction in your payment as you declare the income and second by the deemed income!!

rogerblack

My understanding is that the second property - if you own it - will usually be capital.
this amount of capital will stop you getting any universal credit whatsoever.
There however may be transitional protection for tax credits - providing your circumstances don't change, you may continue to receive a similar amount.

sall1

But i run this as a business do the same rules apply?

rogerblack

My understanding is yes - if you have >16K tied up in capital in a buisness, you can't claim universal credit, or the 'tax credit' like element.

There may be transitional protection, for existing claimants, but this will stop on a change of circumstances - birth of a child, you moving, ...
Buy to let - which is a particularly capital inefficient method of earning, may be hit badly by this.

UC has a number of traps for buisnesses with not much profit - another one is that you can be assumed to be receiving the minimum wage for any time you're working, and your UC award will be tapered on that basis.

So, if you're not earning 35* minimum wage - you may be required to find more work/better paid work.
This is even if you're working say 60 hours, but only making 35*NMW.
(Exceptions can be made for first 12 months of a buisness)
The monthly reporting means that buisnesses which earn on a seasonal basis - such as farming - have problems too.

If all your earnings for the year are in September - you may have a lot of earnings for that month (which will zero the UC award for that period).
But you may be working hard the rest of the year to prepare for that month - and under UC, there is usually no averaging. You will be required to seek more work for the 11 months you're not earning anything.
Even if, with the same earnings, averaged over the year, you would get an award, and be deemed to be working enough for support.

princessdon

Either the business owns it or the individual.

rogerblack

princessdon wrote: »

Either the business owns it or the individual.

But capital is not ignored because it's in a business.