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

M.Johnson_2

BigAunty wrote: »

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....

Yes 24hrs you qualify but 30 hrs you get more money. Why not just work another 6hrs in a self employed business thats what most do.

Dunroamin

M.Johnson wrote: »

Yes 24hrs you qualify but 30 hrs you get more money. Why not just work another 6hrs in a self employed business thats what most do.

Unfortunately, that doesn't seem to be the choice that most people make.

MissMoneypenny

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're self employed and want to claim benefits too, then the UC claim is based on the SE person earning a pre set amount (even if they don't earn that much) based on NMW. Basically, the welfare state will no longer support a failing business; year after year; as WTC had been allowing people to do.

If a claimant can't earn NMW from their new business after 1 year* and they need benefits to live; then they will either have to look for backers for their business (bank loan/investors); increase their profit; shut the business down and sign on as unemployed; get a PAYE job and run their business as a hobby.

*Universal Credit rules means claimants will not be allowed to keep starting a new (failed) business every year, to avoid the work programmes.

M.Johnson wrote: »

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

There will be millions of small businesses left in the UK, as many of these people don't claim benefits.

It's the loophole in WTC that allowed people to avoid 'signing on' and the work programmes, that is closing down.

M.Johnson_2

MissMoneypenny wrote: »

If you self employed and want to claim benefits too, then the UC claim is based on the SE person earning a pre set amount (even if they don't earn that much) based on NMW. Basically, the welfare state will no longer support a failing business; year after year; as WTC had been allowing people to do.

If a claimant can't earn NMW from their new business after 1 year* and they need benefits to live; then they will either have to look for backers for their business (bank loan/investors); increase their profit; shut the business down and sign on as unemployed; get a PAYE job and run their business as a hobby.

*Universal Credit rules means claimants will not be allowed to keep starting a new (failed) business every year, to avoid the work programmes.



There will be millions of small businesses left in the UK, as many of these people don't claim benefits.

It's the loophole in WTC that allowed people to avoid 'signing on' and the work programmes, that is closing down.

I know there will be millions of small business left in the UK, but also millions of new small business that may take longer than 1 year to get off the ground will not be able to succeed

MissMoneypenny

M.Johnson wrote: »

I know there will be millions of small business left in the UK, but also millions of new small business that may take longer than 1 year to get off the ground will not be able to succeed

I ran 3 businesses when my children were little as I knew that when I started them all up, no single new business would pay my mortgage straight away. It was hard work, but one by one, I was able to close the bread and butter businesess down (gave them/sold equipment to friends' who were just starting up) as my jam business took off and an accident meant I could no longer do them. This took less than 1 year. I never claimed Tax Credits as there were no benefits to support a business in those days. In addition to my 3 businesses, I even cleaned someone's house for a few weeks (I hate cleaning) and mucked out a yard, to bring in extra cash in those early months.

My daughter decided to start her business a different way and worked PAYE and ran her business alongside her PAYE job, until her business could support her. She never claimed Tax Credits.

If you think your business can support you and you need longer than the 1 year that benefits will help a new start-up with under UC (which is still very generous); then why not take your business plan along to a bank and ask for a loan? If your business plan is sound, they will back you. If they won't, then you know they think your business won't support you in the future.If you have been running a business for more than a couple of years and using Tax Credits to support you, then maybe you need to revise your business plan?

dktreesea

Op, if you become self employed at the moment, then at some point in the future you may be moved from WTC onto UC. This is from the government's latest briefing paper (October 2013) https://www.gov.uk/...data/.../uc-and-self-employment-quick-guide.pdf:


Moving to Universal Credit

In future, if you are self-employed and onbenefits, you may be moved onto Universal Credit if your circumstances have notchanged for some time. If this happens, you will not be subject to a minimumincome floor for the first 6 months of your claim. This will give you time to increaseyour earnings and makes sure that you do not lose out due to the change.

It's important to distinguish between those who are already self employed by the time UC comes to their area, and those who are wanting to make a claim for UC as a self employed person, i.e. a new claim, becoming self employed only after UC has become established in their area.

For the latter group, they will have to attend a gateway interview, etc etc and not be subject to the MIF for the first 12 months of their claim, IF the DWP advisor agrees that their self employment opportunity has a chance.

So what about for people already self emplpoyed by the time UC rolls into town? If you are self employed and DON'T make a claim for UC, because you are already receiving a raft of benefits like WTC, HB etc there is no incentive to move onto UC if the application of the MIF means you lose a considerable amount of those benefits.

The government appears to recognise this and says such people MAY be moved onto UC. Surely at some point this will have to become WILL be moved onto UC, as the other benefits fall away and are no longer applicable?

Nowhere is it mentioned that these people, with existing claims, will have to get the DWP to agree they are gainfully employed. It would appear the government is prepared to accept that people who are already self employed are genuinely self employed?

So, for this group, it appears to me that when they are eventually migrated onto UC they will not have the MIF applied for six months. In the meantime it will be business as usual and they will continue to enjoy the level of support they currently enjoy.

dktreesea

OP, if you would rather be self employed than unemployed, my advice would be to go for it. Claim WTC and the associated run on benefits that you may also be entitled to, like HB and CTB. Keep in mind WTC is quite a bit lower than the JSA. So I wouldn't go ahead with this without much savings to tide you over a few weeks, unless you are sure you will be able to make up the shortfall quite quickly. At the same time , I wouldn't let the not so imminent arrival of UC deter you from your goals. Who knows, by the time it gets to your area and you get migrated onto it, you could already be making the equivalent of the FT NMW in profits.

M.Johnson_2

dktreesea wrote: »

OP, if you would rather be self employed than unemployed, my advice would be to go for it. Claim WTC and the associated run on benefits that you may also be entitled to, like HB and CTB. Keep in mind WTC is quite a bit lower than the JSA. So I wouldn't go ahead with this without much savings to tide you over a few weeks, unless you are sure you will be able to make up the shortfall quite quickly. At the same time , I wouldn't let the not so imminent arrival of UC deter you from your goals. Who knows, by the time it gets to your area and you get migrated onto it, you could already be making the equivalent of the FT NMW in profits.

And if she doesnt make NMW x 35hrs, she could just go back to the JSA option of the new UC.

You say WTC is quite a bit lower than WTC, I thought its not that much different is it?

BigAunty

M.Johnson wrote: »

Yes 24hrs you qualify but 30 hrs you get more money. Why not just work another 6hrs in a self employed business thats what most do.

My understanding is that for those on low incomes, the extra hours that they work over the WTC limit often gets swallowed by taxation, steep withdrawal of means tested benefits like HB/WTC etc, then there's extra travel to work costs to attend to, sometimes child care costs.

On the govt's introduction to Universal Credit, they give specific examples of the benefit trap that belongs to tax credits whereby the recipient gets next to no extra income from working significantly more.

BigAunty

M.Johnson wrote: »

I know there will be millions of small business left in the UK, but also millions of new small business that may take longer than 1 year to get off the ground will not be able to succeed

How on earth did businesses get established before tax credits? Perhaps people put more effort into research and preparation to ensure that they succeeded as they, not the state purse, took on the risk?

We have seen dozens of posts on this forum of benefit claimants who pop up to ask how to claim WTC with their businesses with no evidence that they even bother to write a business plan - obviously, they don't need to lay any proper ground work to becoming self employed as they know that they will be heavily supported by benefits for as long as they wish under tax credits.

The UK will return to an ethos that a person is confident they can earn a living from their own businesses rather than confident their rent will be continuously paid even if they produce a pittance in profits for years. It will go back to a time when people didn't found their businesses simply by filling in a tax credit form.

Remember that it is the high degree of benefit dependency by self employed claimants that has made the govt decide to revise the criteria - it is daft to receive tax credits by virtue of being busy for x number of hours regardless of business income generated.

There are probably tens of thousands of 'businesses' where the claimant has been heavily dependent on benefits from the day they founded it years ago to the present day.