Not Gainfully Self Employed - Can I continue or do I need to close my shop?

NotAllThere

I am about to make a new claim to Universal Credit, a natural migration from WTC, since I am moving area and I require help with housing costs (I also currently receive HB which partially covers my rent). I don’t want to get into a rant about how bad self-employed people are being treated, with reference to the MIF and gainful employment, that’s not what I’m here for (though I concur it’s a swine).

In the tax year 2018-2019 my self-employed turnover was ~£6000, which left me with a profit of ~£4000 after expenses - this money was counted as drawings. This year, my final profit will probably come out to be approximately the same. I have been self employed for over 12 months, and my earnings are currently less than the MIF for the 35hour, over 25yrs, category. I conclude then, that for the purposes of applying for Universal Credit, I am not gainfully self-employed.

I am not at issue with, nor disagree with, the fact that I will need to find additional work when I move to Universal Credit in a matter of weeks. I will be expected to look for work as an _employee_ as part of my Claimant Commitment (for which I have no qualms), but my question is - will I be forced to cease trading as a sole trader because of that? Or am I able, as long as I am fulfilling my CC, to continue my self-employment as a side job? Indeed, I realise that I will have to report earnings and these will be deducted from my Universal Credit benefit during relevant Assessment Periods. I ask this question because I really enjoy my work and I currently have repeat customers, though the work I do is irregular. Will the MIF apply if I am actively seeking employment, but I am continuing to be self-employed, but I am fully complying with the requirements of my CC?

I realise, from various Google searches, that a Claimant Commitment is tailored to each individual, but I would really appreciate some guidance before I have my interview, such that I am aware of what to expect when I attend.

calcotti

You might find this thread helpful https://forums.moneysavingexpert.com/discussion/6106174/after-the-universal-startup-period/p1

NotAllThere

calcotti said:

You might find this thread helpful https://forums.moneysavingexpert.com/discussion/6106174/after-the-universal-startup-period/p1

Thanks for that calcotti. So, based on the following comment from that link...

“If you're earning peanuts by the end then you can ask them to review whether you are considered to be 'gainfully self-employed'. The MIF only applies if you are, and if you aren't, then the MIF won't apply but you'll then be subject to work-related requirements, so it's a bit of a double-edged sword.“

As per my understanding, and based on my own situation - as long as I am complying with any CC with reference to my own work-related requirements, I can continue to be an independent consultant, though strictly not self-employed if I receive payments from any employer (based on following comments). Assuming I report any earnings from my business, which I intend to do.

Does that sound correct? Or have I misunderstood?

calcotti

Unfortunately there isn't a definite answer. The DWP will decide based on their view of your circumstances. However what you suggest is certainly possible.

TELLIT01

Presumably, if you can continue to operate your self-employed business whilst fulfilling the requirements of UC there won't be a problem.

Icequeen1

I don't think you can presume that you are not gainfully self-employed. It depends whether it is your main employment, if it is carried on in an organisaed, developed way with an expectation of making a profit. See https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/gainful-self-employment/ 
It will be up to DWP to decide whether you are or not - that will determine whether the MIF applies or whether you will have to look for other employment. 

Spoonie_Turtle

One factor is the regularity, and they will take into account whether in your particular field the irregularity is to be expected. Also whether you are developing your business, trying to find more work, that kind of thing.

I strongly suggest reading the legislation and official guidance about it to see exactly where they're coming from I don't know that you'd have to stop altogether, but to not be gainfully self-employed you'd have to basically have it as a bit of work on the side with looking for an employed position being your main occupation (not technical terms of course! )

NotAllThere

Spoonie_Turtle said:

One factor is the regularity, and they will take into account whether in your particular field the irregularity is to be expected. Also whether you are developing your business, trying to find more work, that kind of thing.

I strongly suggest reading the legislation and official guidance about it to see exactly where they're coming from I don't know that you'd have to stop altogether, but to not be gainfully self-employed you'd have to basically have it as a bit of work on the side with looking for an employed position being your main occupation (not technical terms of course! )

Hi Spoonie, thanks for the information.

Indeed, I have made numerous Google searches with regard to legislation on the MIF. But it's difficult to understand.

I suppose what I'm asking is - although I have currently been treating myself as self-employed - that is - it has been my main occupation for a number of years - am I now able to turn around and say to the DWP, "I can't afford this on my own - can I make employment search my main occupation with the SE as something on the side?" and thereby not be restricted to the MIF. From my point of view, I don't think I could practically continue with the self-employment alone as a main source of income, but nor do I just want to completely quit. I have a history of mental health problems, though fairly stable over the last few years, and the SE has been a form of occupational therapy, but with an income, if somewhat short of what UC requires.

Spoonie_Turtle

NotAllThere said:

Spoonie_Turtle said:

One factor is the regularity, and they will take into account whether in your particular field the irregularity is to be expected. Also whether you are developing your business, trying to find more work, that kind of thing.

I strongly suggest reading the legislation and official guidance about it to see exactly where they're coming from I don't know that you'd have to stop altogether, but to not be gainfully self-employed you'd have to basically have it as a bit of work on the side with looking for an employed position being your main occupation (not technical terms of course! )

Hi Spoonie, thanks for the information.

Indeed, I have made numerous Google searches with regard to legislation on the MIF. But it's difficult to understand.

I suppose what I'm asking is - although I have currently been treating myself as self-employed - that is - it has been my main occupation for a number of years - am I now able to turn around and say to the DWP, "I can't afford this on my own - can I make employment search my main occupation with the SE as something on the side?" and thereby not be restricted to the MIF. From my point of view, I don't think I could practically continue with the self-employment alone as a main source of income, but nor do I just want to completely quit. I have a history of mental health problems, though fairly stable over the last few years, and the SE has been a form of occupational therapy, but with an income, if somewhat short of what UC requires.

Right, yes I understand. From my layman's perspective, it definitely sounds reasonable that you could, as long as you can show that you're not trying to develop the business, gain more work, or spending much time doing activities associated with it (ideally if you only do the odd jobs and literally nothing else to do with it) ... in theory you should be able to. 

Ultimately the decision is up to a DWP decision maker, though you might want to start building your case based on the factors mentioned in legislation / guidance (the guidance gives examples of different hypothetical situations, in case you've not seen it already, might be helpful). One thing they might say is that if you qualified for WTC on the basis of your SE work then you were gainfully SE, because the criteria sound fairly similar. If so, how are your circumstances now different?

Alas, it's another complicated, grey area with few definitive answers!

NedS

NotAllThere said:

I am about to make a new claim to Universal Credit, a natural migration from WTC, since I am moving area and I require help with housing costs (I also currently receive HB which partially covers my rent). I don’t want to get into a rant about how bad self-employed people are being treated, with reference to the MIF and gainful employment, that’s not what I’m here for (though I concur it’s a swine).

In the tax year 2018-2019 my self-employed turnover was ~£6000, which left me with a profit of ~£4000 after expenses - this money was counted as drawings. This year, my final profit will probably come out to be approximately the same. I have been self employed for over 12 months, and my earnings are currently less than the MIF for the 35hour, over 25yrs, category. I conclude then, that for the purposes of applying for Universal Credit, I am not gainfully self-employed.

I am not at issue with, nor disagree with, the fact that I will need to find additional work when I move to Universal Credit in a matter of weeks. I will be expected to look for work as an _employee_ as part of my Claimant Commitment (for which I have no qualms), but my question is - will I be forced to cease trading as a sole trader because of that? Or am I able, as long as I am fulfilling my CC, to continue my self-employment as a side job? Indeed, I realise that I will have to report earnings and these will be deducted from my Universal Credit benefit during relevant Assessment Periods. I ask this question because I really enjoy my work and I currently have repeat customers, though the work I do is irregular. Will the MIF apply if I am actively seeking employment, but I am continuing to be self-employed, but I am fully complying with the requirements of my CC?

I realise, from various Google searches, that a Claimant Commitment is tailored to each individual, but I would really appreciate some guidance before I have my interview, such that I am aware of what to expect when I attend.

You have given very little relevant information upon which to base a decision whether or not you are gainfully self employed.

Are you registered self employed with HMRC?

Do you have an accountant or do your own tax returns each year?

The thread title suggests you own/run a shop?

You state a turnover of £6K with profit of £4K, so £2K expenses. That seems very low if you run a shop - I'd expect significantly higher rents for shop premises?

Do you own the premises or rent? How much is the rent?

What to you do/sell?

How many hours per week do you spend on your self employment (in total, not just running shop)?

What are the opening hours of the shop?

Do you employ anyone else?

Do you solely own the business? In partnership with someone else?

If you give us more information we can give you a better indication of what may happen on UC.

NotAllThere

NedS said:

NotAllThere said:

I am about to make a new claim to Universal Credit, a natural migration from WTC, since I am moving area and I require help with housing costs (I also currently receive HB which partially covers my rent). I don’t want to get into a rant about how bad self-employed people are being treated, with reference to the MIF and gainful employment, that’s not what I’m here for (though I concur it’s a swine).

In the tax year 2018-2019 my self-employed turnover was ~£6000, which left me with a profit of ~£4000 after expenses - this money was counted as drawings. This year, my final profit will probably come out to be approximately the same. I have been self employed for over 12 months, and my earnings are currently less than the MIF for the 35hour, over 25yrs, category. I conclude then, that for the purposes of applying for Universal Credit, I am not gainfully self-employed.

I am not at issue with, nor disagree with, the fact that I will need to find additional work when I move to Universal Credit in a matter of weeks. I will be expected to look for work as an _employee_ as part of my Claimant Commitment (for which I have no qualms), but my question is - will I be forced to cease trading as a sole trader because of that? Or am I able, as long as I am fulfilling my CC, to continue my self-employment as a side job? Indeed, I realise that I will have to report earnings and these will be deducted from my Universal Credit benefit during relevant Assessment Periods. I ask this question because I really enjoy my work and I currently have repeat customers, though the work I do is irregular. Will the MIF apply if I am actively seeking employment, but I am continuing to be self-employed, but I am fully complying with the requirements of my CC?

I realise, from various Google searches, that a Claimant Commitment is tailored to each individual, but I would really appreciate some guidance before I have my interview, such that I am aware of what to expect when I attend.

You have given very little relevant information upon which to base a decision whether or not you are gainfully self employed.

Are you registered self employed with HMRC?

Do you have an accountant or do your own tax returns each year?

The thread title suggests you own/run a shop?

You state a turnover of £6K with profit of £4K, so £2K expenses. That seems very low if you run a shop - I'd expect significantly higher rents for shop premises?

Do you own the premises or rent? How much is the rent?

What to you do/sell?

How many hours per week do you spend on your self employment (in total, not just running shop)?

What are the opening hours of the shop?

Do you employ anyone else?

Do you solely own the business? In partnership with someone else?

If you give us more information we can give you a better indication of what may happen on UC.

Hi Ned, thanks for the help. To summarise my situation using the key points you listed...

Yes, I am registered  as sole trader with HMRC as this is a legal requirement. I am also the sole director of a private company, though this is regarded as dormant in the eyes of HMRC since there haven’t been any significant transactions.

i don’t currently have an account. I prepare my own tax returns.

Aplogies for any unintentional confusion - I used the term shop in the metaphorical sense. In fact, I work from home, remotely, as a software engineer. I guess you could consider it as part of the gig economy where I provide, usually short, game development services to customers, globally. My expenses include use of home, broadband internet, etc. So they are fairly minimal.

I spend approximately 35 hours per week on the freelancing, when this work is available. However, there can be gaps between contracts and, with these gaps, I spend time finding other clients and I also, perhaps not surprising as a freelance software dev, I spend some time on my own projects/games as part of my private company. There is no significant source of income from this - my main income is with freelancing, including tax credits.

My working/opening hours are usually from 10am to 6pm. But this is not always the case, since some clients can require my services late in the evenings, which may cause my to start later the next morning. As mentioned, I have mental health issues for which, various doctors in the past, have stated that I need a  “good 8 hours of sleep per night”.

I solely own both businesses and I do not employ anyone. That said, my goal - prior to having to move home and onto UC - was to create an online agency where I would, in effect employ myself as a freelancer and others, also on a freelance basis in order to take on larger and longer, and more lucrative, projects - I can only do so much alone. This would be set up via freelancing site(s) using their own facilities.

Thanks for listening and providing advice to allow me to understand what I can achieve, moving forward.