bounce back loan and universal credit

Grumpy_chap

Thanks Jeremy - UC does seem to have some very odd rules, particularly regarding company assets for self-employed and Ltd Co Directors and what is classed as capital (£16k) and what is excluded.  I don't think I will ever be knowledgeable enough to be near to understanding.

Jeremy535897

Grumpy_chap said:

Thanks Jeremy - UC does seem to have some very odd rules, particularly regarding company assets for self-employed and Ltd Co Directors and what is classed as capital (£16k) and what is excluded.  I don't think I will ever be knowledgeable enough to be near to understanding.

It's not that hard. I knew zero about it before April.

Spotnpaul

Jeremy535897 said:

Grumpy_chap said:

Does this make any difference whether the OP is self-employed or Ltd Co Director?
Also, looking at the definition of business assets that Jeremy cited:

Jeremy535897 said:

"Meaning of business assets
H2022 Business assets include standard items such as machinery, vehicles, fixtures and cash held in the bank (including money held following the sale of assets). 

Surely a loan would not create a net asset to the business?  The money received from the bank will be entered as a credit in the business bank account but a liability in the business loan account.  Net impact to the balance sheet is zero.

If only it were that simple...

With UC and self employment you have to look at everything in two different lights. The first is whether the receipt of a BBL is income (obviously it can't be an expense). Money appears in your business bank account just like it does when a customer pays your invoice, and that is income. The answer is that a loan isn't income because you have to pay it back (you'd soon go out of business if you paid all your customers back).

The second is that when income has been sitting in your bank, it becomes capital, so the next question is whether that capital has to be treated as giving rise to deemed income (like having £16,000 in a personal savings account). This particular capital can be disregarded per H2022.

I have said before that UC seems to be a mixture of tax law, company law and accountancy rules designed by a committee containing no tax lawyers, company lawyers, accountants or benefit claimants.

That last sentence is spot on.