Benefits, self-emplyment, "gainful employment" and "minimum income floor"?

rogerblack

Minimum wage goes up - yay!
MIF bites much, much harder.
Combined with the reduction or elimination of work allowances, self-employment under UC just got a lot harder.

Gavin234

So after one years trading the business is still not making enough profit after all expenses to be equal to that many hours x the new higher Min Wage,

How long can someone try and make the business work?

Or should they give up and go to JSA? When applying for JSA they will have to give a reason and they say my business was looking promising for the future,, but it wasn't making enough profit per hour to equil the new higher min wage x 35 hrs week. I could have made a successful business if I had more time, but was worried that I would be investigated and told that it was not a viable business as the profit was still not high enough after a year of working so hard trying to pay the initial start up costs?..

dktreesea

Naf wrote: »

Can anyone please explain these all to me? Particularly what is meant and how benefits are affected by:

• gainful employment
• minimum income floor

I just can't work out how this is going to apply to us, even if I wasn't a student.
I'm studying at uni, we have three kids (youngest is almost three) so claim CTC and HB, and my wife has just started a home bakery business so we've started claiming WTC (our area isn't UC yet). We're trying to be prepared for when the youngest hit full-time school age and my wife will be forced to find work in order for us to keep receiving the various benefits.
So how do they asses if it counts as 'gainful employment', and how do they work out the 'minimum income floor' for us as a couple? I read somewhere that my income counts towards it as a couple? Its not written anywhere in plain and simple English.
Also, if anyone knows what's going to happen long-term in terms of HB, that'd be great too!

It's based on household income. So say your work conditionality means you are expected to work full time, and your wife is not expected to work at all (child too young). Then your universal credit (including any credits for housing) will be based on the higher of your actual income each month or the minimum income floor, (35 hours a week * the NMW).


It can get complicated. There's an income threshold. Say your wife is wildly successful and makes £3k profit in the first month, and say that is more than enough to stop any benefits being paid for that month. It may also stop benefits in the following months because there is a surplus income calculation, bringing forward excess profits from previous months and applying them to the calculation for the current month.

dktreesea

Naf wrote: »

Yes, we expect that it can be profitable. Very profitable in terms of profit percentages. What we don't think it will do is make actual minimum wage for actual hours worked for a while yet.

It's not about actual hours worked, but rather income thresholds.


Keep in mind that with young children, the required working hours for your wife, for the purposes of calculating the minimum income floor, won't be full time. All I can find on this trawling through the net is that the hours the principal carer would be expected to work would be as for lone parents. But it's not clear exactly what these earnings thresholds will be set at. So far I have seen groupings 0-1 year old child, 1-4 years old, 5 - 12 years old, 5 - 13 years old and even 13-16 years old.


If you are working full time and earning more that the NMW then it could be that, even though your wife's earnings are taken into account each month for the purposes of calculating UC, you have no conditionality as a household, i.e. you are already earning enough (keeping in mind this is based on income NOT hours worked) so that there is not conditionality for your household.


For example, say you work 20 hours a week, for £15 an hour, so an income of £300 a week. This is already over the NMW * 35 hours a week. So you would not be subject to any conditionality, if your children are deemed young enough so that your wife, being the principal carer, isn't required to work.


Will you still be a student when UC for families finally gets implemented 2016/2017/sometime in the future? I can't find anything on how UC will work if one of the parents is the main carer for children and the other one is a full time student.

dktreesea

SkyeKnight wrote: »

Whilst the rules might be vague defining a profitable, viable business, there is absolutely no-way, never, ever, never that 50p an hour will qualify. Not under UC or for WTC. I think it is safe to say that earnings of around minimum wage would be acceptable (less in the first year when getting going). There is an enormous gulf between 50p an hour and minimum wage.

Not true, not under the current regime at least. There are plenty of self employed businesses that declare losses year after year and get their maximum entitlement to benefits as a result.


All that you have to show for WTC is that you are trading with the expectation of making a profit and justify the hours you claim to be working each week. Do you seriously think there are no self employed people out there working for less than 50p an hour? There are plenty. In 2012/13 the median income (median, not average) for the self employed was £207 a week.


Our neighbour has a small jewellery business. She makes jewellery throughout the week, sometimes taking a couple of days to make one piece, and sells them at craft fairs once a month, twice coming up to Xmas. If she makes £200 on the day she says its a good sale. She claims her full entitlements.

FBaby

All that you have to show for WTC is that you are trading with the expectation of making a profit and justify the hours you claim to be working each week. Do you seriously think there are no self employed people out there working for less than 50p an hour? There are plenty.

I can't see how the two statement reconcile. How can you be in expectation of making a profit if year on year, you only make 50p an hour? At which point do you face reality that if you haven't started to earn more after 1, 2, 5, 10 years, it just isn't going to happen?

GwylimT

As a student you can provide most of the childcare required so I really don't see how this is an issue, I also don't know why you're making this your wifes responsibility. If you choose to use childcare you should both be paying for it.

Why aren't you working?

dktreesea

FBaby wrote: »

I can't see how the two statement reconcile. How can you be in expectation of making a profit if year on year, you only make 50p an hour? At which point do you face reality that if you haven't started to earn more after 1, 2, 5, 10 years, it just isn't going to happen?

That is a profit though. 50p an hour is a profit. So is 1p an hour.


This is a political issue. At some point the then Labour government decided, given there wasn't enough work to go around everyone who wanted to work, that they would fund everyone who worked, regardless of how much or little they earned an hour. The impetus for this wasn't the man on the street at all; it was the farmers, who are usually self employed and were struggling to stay on the land.


Tony Blair justified this by saying if only 5 businesses in every 1,000 new self employment ventures took on staff it would be well worth it. A better understanding of basic economics would have made him realise that non exporting businesses brought no new money to the overall pot of money available to spend in the UK.


If your local mechanic employs 5 people, then three new mechanics set up, all working long hours and undercutting him by 40%, it could be that he has to lay 4 of his own mechanics off. Now we have 5 people in work instead of 6, all claiming benefits. The new guys on the block are working for cheap rates so don't earn much, hence the benefits claims. The owner of the original business is now struggling, and has gone from £40k income a year down to £15k, so he now qualifies for benefits. And the guy who still works for him now works 4 days instead of 5 so also qualifies for benefits.

dktreesea

FBaby wrote: »

I can't see how the two statement reconcile. How can you be in expectation of making a profit if year on year, you only make 50p an hour? At which point do you face reality that if you haven't started to earn more after 1, 2, 5, 10 years, it just isn't going to happen?

You don't ever have to "face reality", even under UC and the MIF. If you are running a business with the expectation of making a profit, then all that is happening is that the amount of support the government is now prepared to give your business is maximum benefits for one year and thereafter based on the higher of what you actually earn or the NMW for the hours you are required to work.


Yes, people who can't lift their game enough to make the NMW in profits are going to lose out. If you have 2 children, old enough so both parents are required to work full time and rent in our area, I calculated that going from maximum benefits to MIF benefits would reduce the subsidy from £22k a year to £7,500 a year.

FBaby

Yes, people who can't lift their game enough to make the NMW in profits are going to lose out.

That's what I mean by facing reality.

Tony Blair justified this by saying if only 5 businesses in every 1,000 new self employment ventures took on staff it would be well worth it

Well worth it to show a decrease in the number of people looking for employment, not well worth it from a tax perspective. If all the 4 people employed were entitled to JSA before, but now get more tax credits instead working, I can't see how there is any financial benefit in them working.

Surely the ultimate goal is for workers, all of them, to pay more in than they take out. Paying tax credits for years at the highest levels just to justify that the person is working doesn't seem very productive to me.