Universal Credit as a sole employee/director - help understanding application

terry___butcher

Hi all, first post on here. Appreciate any help you can offer me in understanding this.

I'm a sole employee / director of my own limited company - I pay myself a salary of £1002.36 (1099.64 BEFORE tax) a month through PAYE and then take dividends on top of that. Over the year the dividend amount is usually around 10-15K tops after all expenses, taxes, accounting fees etc - this fluctuates year on year. My wife works 2 days a week part-time (16 hours) and takes home £745ish (£875 BEFORE tax).  We have savings of less than £2000, have a mortgage with £196000 to pay and the only benefit we get is £83.50 a month Child Benefit for our one son.

So my question is - How do I go about claiming UC as my earnings are grinding to a halt, and will likely be furloughing my business in the new few weeks. That will leave me with £800 coming in a month and my wifes part-time salary.  I have looked a couple of times at calculators but can't figure out how to apply with my business set up. Do I just put in my PAYE salary? How do I account for dividends (even though these aren't being paid during C19 situation). I honestly find the whole application baffling!

Again, thank you in advance for any help. I imagine there's little even on offer for my situation by want to try.

Ryan

huckster

https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/universal-credit-and-self-employment-quick-guide
You add earnings as an employee (director of the company), which is what you are reporting through HMRC RTI.  And you put in your self employment net income after the expenses have been taken out including your pay, which you have separately reported through HMRC.  If the Benefit calculators don't allow two types of income to be added, then put it as self employment and input the net profit per month amount including the wages you withdraw.

So when you have a UC claim up and running, UC will receive two bits of information related to your employment. There is an automatic feed from the HMRC RTI you report and every month you will be asked to report the business income and expenses on a cash accounting basis.
If you search around online,there are much better explanations from accountants and business owners that have been doing this for years. 

terry___butcher

huckster said:

LINK
You add earnings as an employee (director of the company), which is what you are reporting through HMRC RTI.  And you put in your self employment net income after the expenses have been taken out including your pay, which you have separately reported through HMRC.  If the Benefit calculators don't allow two types of income to be added, then put it as self employment and input the net profit per month amount including the wages you withdraw.

So when you have a UC claim up and running, UC will receive two bits of information related to your employment. There is an automatic feed from the HMRC RTI you report and every month you will be asked to report the business income and expenses on a cash accounting basis.
If you search around online,there are much better explanations from accountants and business owners that have been doing this for years. 

Thank you so much for this reply @huckster this is really helpful. My only question is, do I list myself as self-employed or employed (as technically I'm so of both - being an employee of my own business). When I tick self-employed the UC calculator offers no financial help, but if I say employed - which I am technically - I get some suggestion I could get a UC amount. 

Spoonie_Turtle

You can do a manual calculation using the information here https://www.understandinguniversalcredit.gov.uk/new-to-universal-credit/how-much-youll-get/
The calculators might possibly be applying the Minimum Income Floor still which has been suspended for some time (I can't remember how long).

The other option to get some idea of entitlement is to tick employed in the calculator then input all your income (including wage and profit) because I think they're dealt with in the same way in the calculations anyway.
EDIT: for clarification, I mean just for when using a benefit calculator before deciding whether to apply - NOT in the UC application itself.

huckster

You have to register yourself as self employed for Universal Credit purposes.  There is an option to say that you are both employed and self employed, but that is where you work for one company and you  are also self employed.
What is happening at the moment,  as already mentioned, is that UC are not applying a minimum income floor, which is an assumption you earn at least 35 hours per week national minimum wage equivalent.  Instead they will look at the actual earnings amount, so I guess you may not be able to pay yourself the amount you have been reporting to HMRC and in terms of net cash profit per month, that may also not show much.  

Dazed_and_C0nfused

My wife works 2 days a week part-time (16 hours) and takes home £745ish (£875 BEFORE tax)

Although nothing to do with your question money is obviously an issue at the moment so do you know why your wife is paying tax on £875?

Does she have a second job or pension?

terry___butcher

Dazed_and_C0nfused said:

My wife works 2 days a week part-time (16 hours) and takes home £745ish (£875 BEFORE tax)

Although nothing to do with your question money is obviously an issue at the moment so do you know why your wife is paying tax on £875?

Does she have a second job or pension?

I should have clarified she pays into a pension and a savings account before being taxed.