Covid-19 grants & how it affects Universal credit

susieh1989

Hi there,
myself and my partner have a universal credit claim. He has a cafe business which has just passed its first year- he has just been given a £25K retail hospitality grant by the government due to covid-19; does anyone know how this affects our universal credit claim (eg is it classed as income or disregarded or?) I have asked on the UC journal and tried to phone but they’re incredibly busy so I’ve had no response. My concern is that I’m currently Signed off work on long term sick due to a health condition and we have young children, we rely on the UC money especially with my partner unable to work right now too due to covid-19, and the 25K is for his business not for our rent or food and household bills so I worry they will class it as income and therefore we receive no help. Thanks in advance x

calcotti

See https://forums.moneysavingexpert.com/discussion/6133208/retail-hospitality-covid-grant-and-universal-credit#latest

NedS

It is proving extremely difficult to obtain definitive information on how such grants should be treated.

Firstly, we are talking about the HMRC business grants, often administered by the Local Authority (either £10K or £25K in value), not to be confused with the HMRC 80% income scheme.

According to all information I have been able to find, these grants are treated as taxable income by HMRC. Normally, anything that is taxable income under HMRC's definition would have to be declared as self employed income under UC, but the latest advice work coaches have received is that these grants are to be disregarded in full. I have been unable to verify this or find firm guidance to confirm it, and personally if that is the case I do not believe the decision is correct. Basically, anything that is taxable income should be declared as income for UC purposes and it is unclear why these grants should be treated differently.

Anyway, as best as I can tell for now, the advice is that they will be disregarded in full so you will not need to declare them as income when reporting your self employed income and expenses (please confirm this with your work coach before reporting your monthly income). If this is the case, and the grant is disregarded in full, then you should also not report any expenses you have used the grant to pay. For example, if you receive a £10K grant, and your business rent is £5k/month and you use the grant to pay the rent for the next 2 months, you should not report the rent as a business expense for the next 2 months. So if you are not reporting it as income, it is not reasonable to claim as an expense the bills you have used it to pay. You can't have it both ways

Either way, it really should not make a difference to the amount of UC you are likely to receive as presumably businesses receiving these grants are receiving them to cover essential running costs associated with the business and the grant (money) is likely to come in and go straight back out again in the same AP to pay essential business running costs. If that is not the case then the business probably shouldn't be applying for the grant in the first place.

susieh1989

Thankyou NedS I appreciate your reply. I finally did get an answer from UC which was that it would be disregarded...however that was upon me calling the helpline (as they hadn’t responded to my journal Q as they’re super busy-I understand this)...anyway someone then responded to my journal Q and said that it wouldn’t be disregarded so basically we’re still uncertain but hey ho

huckster

Current position is that this has been raised at the highest level and DWP are waiting to have policy guidance confirmed.  

susieh1989

Thanks huckster, he has to do his end of the month in and outgoings report to UC in two days so I presume we just mention it and wait in wonder? Just frustrating as been told two different things

susieh1989

Just a point to NedS is that not nescesarily will all that money go in and go out as this money is to keep business’ afloat for as long as this goes on for- could be months- so my partner has to hold some back for further months rent and staff payments- therefore yes our UC will be affected if they decide not to disregard it

Hermann

I recall others commenting that ideally the grant is paid into a seperate business bank account and is used as a business asset.

For UC you then note it in your journal that you've received the grant, it's in a separate business account and is a business asset not a personal asset.

Clearly any money you transfer to your personal account to pay household bills will count as income.

As the thread above shows many are hoping for a clarification so that this becomes a blanket way to treat the grant.

If you genuinely believe you are receiving and using the grant as business asset then surely that is how you should report it?

susieh1989

Thanks @Hermann, I haven’t had advice to put it in a separate business account so that must be another thread of someone else’s on here- if you have the link I would appreciate it x

susieh1989

Sorry if I sound thick 😂 I’m not business minded at all so! It would just be helpful to know if to report it (which we will do just to be on the safe side) and whether it will be disregarded or not. 100% of it is being used for his business, staff, rent and bills, with anything left over to pay future rent and bills until he’s able to open up again; so as a family we won’t see that money personally, which is obviously why I’ve been so anxious about it affecting our UC. I am currently awaiting an operation for a brain mass, so I am on sick leave and only getting SSP so the situation is a very anxious one, let alone with all the coronavirus stuff going on, so it’s just nice to get clarity on one thing, and very frustrating that there is no 100% clarity to be had although I appreciate we’re living in unprecedented times and no one foresaw all this, especially the DWP!  Thanks for everyone’s help 

huckster

Just make  a note in journal.  DO NOT report it within the report income and expenses to-do which will appear at the end of the assessment period.  https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide

It is very likely (although not yet confirmed) that the grant money which supports businesses and is not personal support, will be totally irrelevant to benefits.