Universal credit and self employed

BriNylon

I know that if you are self employed your earnings are assessed monthly on a cash basis.  But two questions,
1. Expenses.  If you had sales of £20k and you bought a van for £19k, would your monthly earnings be £1k, or would your expenses be the yearly writing down allowance for the van divided by the number of months in the year.
2.  If your earnings fluctuated eg sales of £50k in 1 month, then sales of £5 in the following month, would you get uc for one month or would it be totalled up and an annual amount and you would have to pay it back if you were overpaid.

calcotti

My sure around rules around capital expenditure that would affect the answer to question 1. https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/how-to-report-your-earnings-from-self-employment Appears to say that capital vehicle expenditure is only a allowable if the vehicle is adapted for business use but I read it that if the cost is allowable it is taken in total at the point of expenditure.

For question 2 you need to look at the rules around surplus earnings and the capital rules.
Profit of £50,000 in a month would almost certainly end your UC claim for at least six months. As income it would be taken into account for up to six months under the surplus earnings rules. 
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses/
Moreover having received £50,000 in one month any money not spent during that month is then treated as capital and if you have capital in excess of £16,000 you are not entitled to UC anyway.

NedS

BriNylon said:

I know that if you are self employed your earnings are assessed monthly on a cash basis.  But two questions,
1. Expenses.  If you had sales of £20k and you bought a van for £19k, would your monthly earnings be £1k, or would your expenses be the yearly writing down allowance for the van divided by the number of months in the year.

UC works on a simple cash in / cash out model, so in simplistic terms you would report £19K of expense in the month in which you purchased the van.

However, whether that expense would be allowed on UC will be up to a decision maker (the Self Employment Work Coach in this case). It would have to meet the tests that the expense is essential for the running of the business and that it is reasonable and not excessive? The first once should be fairly straight forward - you probably need a van for your business. The second is more debatable. Could you have bought a van for £6K that can do the same job? Is spending £19K on a van reasonable given the business income? If the business has income of £20K and you spend £19K on a van, that would probably be deemed to be excessive? However, if the company has an income of £200K then spending £19K on a van becomes far less excessive / more reasonable. These are the types of things a decision maker will consider when making a decision. Ultimately, UC does not exist to fund your business to purchase a van, and if your business has levels of income whereby purchase of a £19K van is not excessive, you are probably way over the levels where you should be claiming means tested benefits.