Currently on JSA want to move onto Working Tax Credits......

dktreesea

The self employed won't be required to work 35 hours per week at the NMW for both parents at all. If they are gainfully self employed it doesn't matter what they actually get paid for the hours they work. The minimum income floor isn't what people have to actually earn - it is what their benefits will be based on, so as if the two parents (assuming their children are of an age that means the parents will be deemed available for full time work) were earning the FT NMW for 35 hours each a week.

This is where the danger lies for self employed people. Say both parents are self employed, working over 30 hours each a week, clearing 50p an hour. The business is profitable and the DWP deems it a real business. So they base the benefits on the higher of your actual profit or the FT NMW for two, and lo and behold, your benefits sink like a stone, from, say, £400 a week down to, say, £100 a week.

There's no requirement to actually earn the shortfall from the business. "Gainfully self employed", at least within the meaning of the UC regulations 2013, doesn't mean actually having to make enough to live on, just instead to carry on the business with the expectation of making a profit. There has been a suggestion that people who don't earn enough "will be required to do more", but SE people who are deemed to be gainfully self employed aren't within the scope of this, because they will be in the no work-related requirements group.

I had thought originally that people who were SE but not earning much could just opt to be assessed as unemployed instead and give up their business. But it's not as if they could opt to go onto contributions based JSA - they don't pay class 1 NICS.

M.Johnson_2

dktreesea wrote: »

The self employed won't be required to work 35 hours per week at the NMW for both parents at all. If they are gainfully self employed it doesn't matter what they actually get paid for the hours they work. The minimum income floor isn't what people have to actually earn - it is what their benefits will be based on, so as if the two parents (assuming their children are of an age that means the parents will be deemed available for full time work) were earning the FT NMW for 35 hours each a week.

This is where the danger lies for self employed people. Say both parents are self employed, working over 30 hours each a week, clearing 50p an hour. The business is profitable and the DWP deems it a real business. So they base the benefits on the higher of your actual profit or the FT NMW for two, and lo and behold, your benefits sink like a stone, from, say, £400 a week down to, say, £100 a week.

There's no requirement to actually earn the shortfall from the business. "Gainfully self employed", at least within the meaning of the UC regulations 2013, doesn't mean actually having to make enough to live on, just instead to carry on the business with the expectation of making a profit. There has been a suggestion that people who don't earn enough "will be required to do more", but SE people who are deemed to be gainfully self employed aren't within the scope of this, because they will be in the no work-related requirements group.

I had thought originally that people who were SE but not earning much could just opt to be assessed as unemployed instead and give up their business. But it's not as if they could opt to go onto contributions based JSA - they don't pay class 1 NICS.

So SE people are not forced to earn 35hrsxNMW but the benefits they get assume they are earning that much OR THEY WILL BE ON CONDITIONALITY!

So they could make 50p per hour profit and continue the business but they will be the same as those on JSA now. They will have to also spend what is it 35hrs looking for extra work? Also have to go to JC and sign on?

This is the big difference though, when these ones go to sign on, they are not saying I did not do any paid work like those on JSA are saying at the moment.

At the moment on JSA its only £5 week they can earn before benefits go down, what about after UC? How much can someone earn before the benfits go down? I expect that is what most self employed businesses will be declaring when they go and sign on.

dktreesea

MacD wrote: »

Thirdly if you are correct then it is looking like most of those who at the moment claim WTC will indeed be classed as unemployed and be under conditionality. I mean who can earn £400wk from self employment these days?

£400 a week, but remember, that is two people working full time at the business rather than one. I don't see why a person can't at least earn the equivalent of 35 hours a week at the NMW from self employment? Why on earth not?

The lady next door does clothing alterations. £8 to do up a pair of trousers, so quite cheap compared to a formal alterations shop, but she has plenty of work. Including stuff farmed out from alteration shops that have too much work on. Likewise the woman across from us who has her own ironing business. She presses linen sheets for one of the swish B&Bs nearby. Rather her than me - her work looks like hard physical labour.

Just because the current welfare regime allows people working full time but making a loss in their business to claim maximum benefits doesn't mean most self employed people are in that position. 4.2 million self employed in Britain and only 700,000 or thereabouts claim any kind of benefit.

Even though some of those who don't claim may not be making much, but can't claim because of their spouse's earnings, or family savings, it would seem that the vast majority of the self employed are not only making a decent living but one that is so good they are excluded altogether from qualifying for benefits.

dktreesea

M.Johnson wrote: »

So SE people are not forced to earn 35hrsxNMW but the benefits they get assume they are earning that much OR THEY WILL BE ON CONDITIONALITY!

So they could make 50p per hour profit and continue the business but they will be the same as those on JSA now. They will have to also spend what is it 35hrs looking for extra work? Also have to go to JC and sign on?

This is the big difference though, when these ones go to sign on, they are not saying I did not do any paid work like those on JSA are saying at the moment.

At the moment on JSA its only £5 week they can earn before benefits go down, what about after UC? How much can someone earn before the benfits go down? I expect that is what most self employed businesses will be declaring when they go and sign on.

No, not quite. If the DWP say you are gainfully self employed, then the minimum income floor will apply. You don't get to choose to be unemployed unless you formally close up shop and apply for JSA. Even then you may not get it, certainly not contributions based JSA, because you haven't paid class 1 contributions to NI.

Housing_Benefit_Officer

If you are doing nails you could make a fortune if you are good people will keep coming back. If you are confident go it alone but if you want experience before going alone then work in a salon. The knack is not reducing your prices to the Vietnamese run salons but to keep your prices fairly high to make sure you make a healthy profit. People will keep coming back if you offer a good quality product.

M.Johnson_2

dktreesea wrote: »

No, not quite. If the DWP say you are gainfully self employed, then the minimum income floor will apply. You don't get to choose to be unemployed unless you formally close up shop and apply for JSA. Even then you may not get it, certainly not contributions based JSA, because you haven't paid class 1 contributions to NI.

Are you sure, I thought it was a case of as long as you are making a loss in your self employment then you are on conditionality?


If you are right thee will be no small businesses left in the UK?

dktreesea

Caz3121 wrote: »

no free school meals if you receive working tax credits.

Unless you live in Scotland, in which case you would qualify for free school meals if your net profit was below £6,420. And, (again may not be this way now in England but it's still available in Scotland) if you have children over 16 still at school or in non advanced education, they would be able to get EMA.

BigAunty

MissMoneypenny wrote: »

30hours per week for just one of the parents; regardless of how much they earn; to maximise benefits.



.

My understanding is that a 2 parent household only has to work 24 hours per week between them to qualify for WTC if their income is low enough. It used to be 16 but changed a year or two ago so incredibly back then, only had to work 2 days a week in the household even if their kids were late teens....

PippaGirl_2

Universal Credit and self employment
Self-employment start up period

We recognise the need for claimants who are setting up a business to be given time to establish themselves and find sources of support. Therefore where a claimant has been self-employed for less than 12 months, a start up period will be granted.
This means that claimants will not be required to look for work or satisfy requirements to be available for work, and we will not assume a minimum level of income from self-employment (known as the ‘Minimum Income Floor’). This will give them time to concentrate on developing their business.
Claimants will be allowed a new start up period every 5 years rather than once in their lifetime.

dktreesea

M.Johnson wrote: »

Are you sure, I thought it was a case of as long as you are making a loss in your self employment then you are on conditionality?


If you are right there will be no small businesses left in the UK?

Under UC, as I understand it, if you are gainfully employed, so work full time in your business, AND the DWP agree that the business is genuine, being pursued in the expectation of making a profit, then there's no conditionality. UC would then be calculated, unless you are in the start up phase (as per Pippagirl's post), based on the higher of your profits or the minimum income floor.

According to the HMRC, their latest published figures for self employed income, (source: www.hmrc.gov.uk/statistics/personal-incomes/tables3-1_3-10.pdf) for the year ended 4/5/2011, not published until 28/12/12, so somewhat out of date by the time we get them, but nevertheless indicative, show, of 5.37 million self employed, 4.16 million declared incomes less than £15k a year (table 3.9). And of those 4.16 million, 858,000 declared a loss.

Of the 5.37 million employed in the 2010/11 tax year, only 1.8 million made over £10k a year. Assuming most claimants are from the 3.57 million self employed who don't make the NMW, then yes, their incomes may well drop under UC.

Two people with children over 13, for instance, would both be expected to work full time. For the purposes of UC "full time" is 35 hours a week. So, at the current NMW, that works out just over £11,000 each. The benefits for a family deemed to be already getting £22k a year are likely to a lot lower than for a family with, say, £5k a year actual income claiming the current range of benefits available. I note that the transition arrangements, whereby the current benefits, assuming no change in circumstances, will remain in place until the UC entitlement "catches up" don't apply to self employed people.