Self employed earnings with Universal Credit

mjky73

I’m sorry if this has been discussed before, I’ve looked through the topics and can’t seem to find anything.

In error I moved from Working Tax Credits to Universal Credit right at the start of the Covid situation when my hours and income stopped over night.  But unfortunately that can’t be changed and I’m stuck now.  

I’ve been used to assessing my income yearly, my self employment work I receive payments throughout a month rather than a lump sum at the end of each month, with no month ever being the same.
I think I understand that if I earn over the current single person award of £409.89 per month the amount of UC payable reduces by 63p per £1 earned over the monthly award amount. 

But I really don’t understand what happens if I earn under the £409.89 in any month. Say I earn £309.89 in a month, what happens then? 

If I earn £1,000 one month is that amount broken down and carried over to subsequent months with no UC payment until that amount is ‘used up’?  Sorry I’m finding it difficult to write down what I’m trying to ask. 

I know there’s currently no minimum income floor due to covid but when this returns I’m guessing if my yearly NET income is about £5,500 I’ll not have been able to claim any UC, as my yearly income is well under the calculated amount they say I should earn based on the national minimum wage for my age group. Is this correct? 

Is there any point in carrying on with the UC claim or am I taking time to sort monthly income/expenditure for a general pointless exercise?
I currently have a UC50 form to complete as I’m self employed due to disabilities and used to receive the disability element of Working Tax Credits.  I’ve been through the whole form, face to face and mandatory reconsideration, appeal and final award with PIP which took over 12 months.  The PIP award period will be coming up for renewal soon and I’ll have to go through all that again on top of the UC. I’m not sure I can cope with the distress that comes with that all over again for UC to find I’m not really receiving any UC as my (although low) earnings are cancelling anything out.

poppy12345

Your thoughts are not correct. If you don't have dependent children then you won't have the work allowance. This means that the 63% taper will apply for all of your earnings. If you receive earnings of £1,000 and you're just claiming standard allowance then your UC will be reduced to zero.

If you've been self employed for more than 12 months then yes the MIF will most likely apply to you once it's in place again.

huckster

Use a benefits calculator such as Entitledto or Turn2us and by entering different earnings amounts you will see how much UC payments you are likely to receive.  This is the best way to assess your situation, as you have not given enough information in your post to offer much advice.   For example, what Housing costs do you have ?  Do you pay rent ?

If you have no Children, then without any work allowance, if you earned say £600 in a month, applying the 63p taper would mean that £378.00 would be deducted from your UC award,  So if you were only entitled to the £409.89 standard allowance, your UC award would only be £31.89.  If you earned £300 in a month, applying the 63p taper would mean £189.00 would be deducted from your UC award.  So £409.89 minus £189.00 = UC award of £220.89
https://www.gov.uk/benefits-calculators

calcotti

 If you are single with no children or rent then your maximum UC is, as you say, £409.89/month. For every £1 you earn your UC will be reduced by 63p. You can therefore earn £650.61/month before your UC reduces to zero.

If you earn £309.89 the earnings deduction is £195.23 so the UC payable is £214.66.

if you earn £1,000 you get no UC for that month but none of it is carried forward to the next month. For this level of entitlement there would only be an impact on the following month if you earned more than £3,150 in the month (the calculation method for arriving at this figure is complex).

If after your Work Capability Assessment is complete you are found to have a Limited Capability for work the first £512 of your earnings will be ignored (if you are not getting help with rent). You would therefore be able to earn £1,162.61/month before your UC reduces to nil. If you are found to have Limited Capability for Work and a Work Related Activity you would receive an extra £341.92/month (the LCWRA element).

Unless you consistently earn more than £1,500/month it appears sensible to persevere with UC until you know the outcome of the WCA (though that is likely to take a long time at the moment).

You are correct that the Minimum Income Floor might result in you having no entitlement. However if you are found to have LCW or LCWRA the MIF would not apply to you.

mjky73

Thank you everyone for your replies and information, I have a better understanding of it now.  I don’t have children and because I share a home with my elderly parents I don’t receive any help with housing. 

So hard as it is emotionally I need to complete the UC50 and go to any face to face assessment. My earnings are low as I’m limited to how much work I can physically carry out, but being able to do some kind of working is important to me. 

Thank you again. 

Icequeen1

mjky73 said:

Thank you everyone for your replies and information, I have a better understanding of it now.  I don’t have children and because I share a home with my elderly parents I don’t receive any help with housing. 

So hard as it is emotionally I need to complete the UC50 and go to any face to face assessment. My earnings are low as I’m limited to how much work I can physically carry out, but being able to do some kind of working is important to me. 

Thank you again. 

Lots of good advice already given, but what prompted you to claim UC in the first place. The legislation around new tax credit claims lacks some clarity and therefore i would seek some specifalist welfare rights advice both in terms of any potential complaint/compensation but also as to whether you could challenge getting back in to tax credits. 

mjky73

Hi Icequeen1,  I made the UC claim after listening to advise from the early government briefings.  Advice was if self employed people found their income had suddenly stopped they should either claim ESA or Universal Credit. Tax Credits were not mentioned.  I knew TC had a number of hours worked criteria and as I knew I was now not fulfilling that criteria I thought I had to claim the UC.  I stupidly thought the switch was only for the Covid period, especially as at that point no advice had been given by HMRC which lead me to believe it was my duty to act on my known change in circumstances.   It would seem from reading people’s posts on here, on other social media platforms and a BBC news article I was not the only one.  Out of interest I sent a Freedom of Information request to HMRC asking how many people moved from TC to UC following an ‘electronic stop notice’ which is created during an application for UC. The figure was interesting and along with the above mentioned examples was of some comfort (Although not for the other people) as it indicated I wasn’t the only one to misunderstand the system.

I appealed the decision to close my Working Tax Credits account and was simply told the system tells you you may lose your Tax Credits and can not Re-apply. I don’t disagree with that however I and others believed we were following an emergency type system which was being implemented for the specific affects of Covid-19 and I actually begged for forbearance given the circumstances.  I also contacted my MP writing how the move had happened and the affect it was having one me.  I pointed out the UC system really did not appear to be set up for people who are self employed and certainly not self employed with disabilities.  I sent copies of the BBC article and the results of my Freedom of Information request.  Last week I received an email from him with an attached letter from DWP. The letter from DWP was of no help as it simply pointed out there was clear online advice given about closing a TC account, that HMRC are not imposing the hours worked criteria and as a self employed person there was the Self Employed Income Support Scheme and Bounce Bank Loans to help.  The information in the letter has all been implemented AFTER a shed load of us made the life changing error in applying for UC.  The warnings all help others greatly, however there’s thousands of us who acted before the advice was changed. 

mjky73

I think I’ve attached the letters I refer to in my previous post.

calcotti

mjky73 said:

I think I’ve attached the letters I refer to in my previous post.

Not clear if that figure of 56,000 plus in that period is people having Tax Credits stopped but no entitlement to UC or it is people who had live Tax Credit claims but were not receiving anything.

The long letter is a typical ‘missing the point’ letter and says nothing about the impact on those such as yourself who applied for UC before the government took steps to try and highlight the implications of claiming UC and then digresses onto SEISS which is not what you asked about.

As you say early announcements encouraged people to claim UC while waiting for SEISS with no warnings attached.

There is now a very clear warning, introduced in the last few days, with a tick box that UC claimants have to tick saying they have read and understood the warning before proceeding with the claim. The fact that the government have introduced is indicative of the fact there was previously a problem.

mjky73

Calcotti, yes I’ve tried to point that out to my MP, DWP and HMRC however it seems I’m banging my head against a brick wall.  I can’t explain how many dark moments I’ve had since I realised the implications of applying for UC.  In one respect although I don’t qualify for housing costs due to living with family it’s a good job I do as they’ve now had to finically support me by paying for food etc. 

mjky73

I’m also incredibly worried as we go forward after Covid-19 as I need the support of WTC even before this all happened.