permitted work while being an own company director

ST777

I have mental problems and isntead of setting simply as a sole trader I started own company. The income will be very low at the beginning, as it's niche. I don't know how to fill in form for permitted work. Am I employee or self - emploed? The work will be less than 16 hours per week. The income is difficult to predict but for sure will be less than 120 pounds per week. It might be even zero. How should i fill in the form? Do I quaify for permitted work? Just wanted to start own business to become independent from welfare benefits one day but got feelings that i made a mistake will end up homeless. Please advice. The first payment i will get will be in the end of August, as i even did not start to sell.

huckster

Presumably ESA benefit ? Any other benefits being claimed ?

Would be self employment.

You need to obtain some official advice about this and if you contact ESA they might be able to point you in the right direction.

I have seen people with health problems get into a real pickle starting up in self employment, because they don't know how to do the accounts in the correct way. Perhaps ESA or your local Job Centre can help with this, if there is a course provider locally that can help you make sure you know the basic business administration requirements.

Darksparkle

HMRC wouldn't consider a company director as self employed so I would be surprised if DWP did.

TELLIT01

Darksparkle wrote: »

HMRC wouldn't consider a company director as self employed so I would be surprised if DWP did.

Unless things have changed recently, a company director is considered to be an employee so would potentially have entitlement to SSP, subject to fulfilling the requirements. They are not classed as self-employed. If claiming ESA there would be the possibility of Permitted Work. The problem I can foresee is that if the Permitted Work would be the same as they would normally do in their role as company director it is unlikely to be allowed.

huckster

This is an interesting subject. A one man band setting up a Ltd company, rather than a sole trader.

In regard to benefits are they an employee or just self employed ?

From what I understood, unless they can evidence they are simply an employee, they would be treated like self employed. They own the Ltd company they set up and they would have to report income/expenses each month, same as if they were self employed.

Darksparkle

huckster wrote: »

This is an interesting subject. A one man band setting up a Ltd company, rather than a sole trader.

In regard to benefits are they an employee or just self employed ?

From what I understood, unless they can evidence they are simply an employee, they would be treated like self employed. They own the Ltd company they set up and they would have to report income/expenses each month, same as if they were self employed.

Sole traders are self employed. Company directors are not. Company directors income is any salary and benefits in kind which are dealt with the same as an employer and ias a shareholder, any dividends. Their income is the company profits. They don't need to report any expenses the company incurs, that's for the company to do.

huckster

I just wonder how this would work with a monthly assessment period benefit such as Universal Credit.

I can see some sole traders deciding to set up as Ltd companies and pay themselves officially very low wages i.e. Below NMW. Would the Minimum Income Floor that applies to self employed be applied ?

The business then makes very little profit due to expenses incurred.

At the moment self employed that obtained previous help through tax credits are finding that UC does not pay much or anything due to minimum income floor being applied. If they were able to get around this by setting up Ltd companies, then I could see this being done.

Darksparkle

UC isn't my area but from a quick google search - https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/companies/

huckster

This article explains self employment or Ltd company director role in regard to Universal Credit. Not currently relevant to OP, but might in the future.

https://www.taxation.co.uk/Articles/2015/04/21/332941/universally-complex