Currently on Universal Credit - is it possible to run a small business at the same time?

Spoonie_Turtle

the_tired_one said:

soolin said:

Spoonie_Turtle said:

the_tired_one said:

soolin said:

the_tired_one said:

I'm hoping someone can advise me on this matter (it's for a relative).

He is married, not in work, 3 children under 12, currently on Universal Credit (for about 2 years) and living in a Council House and the rent is almost totally covered as is Council Tax.

He wants to know if he could open a small online business, mostly selling clothes on eBay.  Obviously income will vary/fluctuate.  Some weeks maybe no sales etc
He knows he would have to register at Companies House.

But how does it affect his Universal Credit and the various payments?  Is there a maximum amount he's allowed to earn? How does he inform them?  Is there a particular name for such a practice etc etc?  At the moment he is unable to phone them to ask due to the lockdown.

Is it even allowed under UC rules?  Any guidance/advice would be appreciated.  Thanks for reading

Does he have a good reason for registering with companies house as a company and not just acting as a sole trader? 

I think he assumed he had to register as a company.  Bad advice given possibly. Does he have to register as a sole trader?

Only need to register with HMRC and that's if his trading income reaches £1000.

The details of the £1000 limit are here

https://forums.moneysavingexpert.com/discussion/6070793/1000-trading-allowance-is-made-clear-on-tax-return

£1000 turnover a year is easy on eBay, it’s only about £85 a month and includes all income including the postage element. 

Thanks.  I think he intends to make more than a £1000 per year so will have to register with Companies House / HRMC?

HMRC. As far as I understand it's only if he forms a limited company that he'd have to register with Companies House. An ordinary sole trader doesn't.

MUMOF3LJG

I work full time ,on UC due to low income and 2 dependant children, looking to run a body shop at home business  how would that affect uc ect...advise needed..

Spoonie_Turtle

MUMOF3LJG said:

I work full time ,on UC due to low income and 2 dependant children, looking to run a body shop at home business  how would that affect uc ect...advise needed..

Your have to report your income and expenses related to it each month and they'd deduct 63% of the profits from your UC. If it's just something on the side with your FT employment being your main occupation then the Minimum Income Floor wouldn't be applied even after 12 months.

poppy12345

MUMOF3LJG said:

I work full time ,on UC due to low income and 2 dependant children, looking to run a body shop at home business  how would that affect uc ect...advise needed..

It would  have been better to have started your own thread, rather than post on someone else's because it causes a lot of confusion.

You will also have a work allowance, how much you'll be entitled to will depend on whether you claim the housing element or not. Details in link. https://www.gov.uk/government/publications/universal-credit-work-allowances/universal-credit-work-allowances

the_tired_one

Thanks for you replies so far - I have passed the info on to my relative.
Just a couple of additional questions.

1) Is it safe to say that if he sets up as a sole trader, he just needs to inform HRMC & Universal Credit. 

2) Does he need an accountant?

He has a lot of health issues hence trying to operate this small venture from home, at his own pace as and when he can.  He isn' fit or able to look for work and work for an employer as things stand and that makes him feel useless.

His main concern  is if he takes this step and makes an income of (eg £100/month) that it might severely impact his UC and housing benefit.  Thanks again

Galloglass

No need for an accountant (or going to Companies House). All that is needed is record keeping to show what has come into a bank account (usually Paypal) and what has been spent on supplies and costs. 

https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/calculating-income-from-self-employment/

He may need an accountant if the business grows to a significant extent - but by then the income will be that he won't be on UC. 

macman

No need to form a limited company at all, though he will of course remain personally liable for any business debts if he does not.
Also, he won't need to register for VAT until annual turnover reaches £85K: below that it is optional.

the_tired_one

Great information folks - so helpful.
Is there some way of calculating how much he can earn without it affecting their UC or calculating how much UC gets reduce (if it does) for x Pounds earned?  Thanks again

calcotti

the_tired_one said:

Great information folks - so helpful.
Is there some way of calculating how much he can earn without it affecting their UC or calculating how much UC gets reduce (if it does) for x Pounds earned?  Thanks again

Just use a benefit calculator and put different numbers in. https://www.gov.uk/benefits-calculators
Because of the children there will be a Work Allowance of £512/month if they do not rent or £292/month if they do rent. Any earnings above this will be deducted at the rate of 63%.

poppy12345

Lucifer656 said:

I work full time ,on UC due to low income and 2 dependant children, looking to run a body shop at home business  how would that affect uc ect...advise needed..

You've posted on someone else's thread, you need to start your own thread. Asking questions on someone else's thread causes confusion.