advice for potential income drop 29 October 2020 at 7:57PM in Benefits & tax credits 8 replies 171 views

lovebaking123

hello, looking for some advice please...
My husband is about to embark on a new business venture with a friend and will potentially be taking a salary of 12'500pa for a period of time. I have done all the standard benefit calculators and they all come back with a rough guide of £550 per week universal credit, child benefit and council tax support. We are private tenants and have four children, have no property or savings. 

From my calculations this would work out somewhere between £2000 - £2300 per month benefits plus the salary of just over £1000. Does this seem reasonable to anyone? I'm quite surprised that the take home would be £3200 ish, similar to the take home of a £54'500 pa salary! Is there anything I'm missing or mistaken with? I was expecting benefit help to be much less. 

Many thanks

Alice_Holt

That does seem high, could you show the breakdown of that amount for just UC, i.e
Basic couple amount;
Child allowance (were all 4 children born before April 2017?);
Housing costs;
 Deductions for earnings from total UC entitlement. 

It would also be helpful to know the age and sex of your children, together with your local housing allowance (LHA). 

calcotti

For UC purposes your husband will be treated as self employed. That means that each month he will have to report all of the business income and expenditure and his self employed earnings will be his share of the difference. If he chooses to pay himself a salary through PAYE the salary will be a business expense and he will be treated as having two sources of income - the employed salary and the self employed earnings. Therefore you cannot assume a benefits income based on the salary, entitlement will fluctuate with business cash flow. If some months produce high earnings they could affect more than one month of UC due to surplus earnings rules.
https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide

Were all your children born before April 2017?

lovebaking123

This is what the calculator is showing me...
Universal Credit payment summary (monthly)

Standard allowance £594.04

Housing £1,196.69

Children £752.91

Total before adjustments £2,543.64

Taken off for earned income (your salary) £453.39

Taken off for unearned income (benefits and savings) £0.00

Total adjustments £453.39

Total payment for the month  £2,090.25
(3 children born before April 2017)

tacpot12

If you are entitled to c£2200 benefits per month, you are right that there will be no difference in the money you have to live on. However, the benefits cap would result in your benefits being capped at c£1,666 pcm or (£1915 if you live in Greater London). I'm not sure why the benefit calculators have decided that the benefits cap won't apply you. Based on the information you have supplied, I think it will, but its not an area I'm expert in. Others with more expertise will be along shortly. 

calcotti

tacpot12 said:

If you are entitled to c£2200 benefits per month, you are right that there will be no difference in the money you have to live on. However, the benefits cap would result in your benefits being capped at c£1,666 pcm or (£1915 if you live in Greater London). I'm not sure why the benefit calculators have decided that the benefits cap won't apply you. Based on the information you have supplied, I think it will, but its not an area I'm expert in. Others with more expertise will be along shortly. 

The benefit cap may not apply if claimant is exempted due to being above earnings threshold in previous months. Presumably husband has been in employment up to now. Nor would it apply if husband is drawing a salary of more than £604/month. https://www.gov.uk/benefit-cap/when-youre-not-affected

calcotti

You need to check the Local Housing Allowance which restricts the maximum housing element you can get and may be less than your rent http://lha-direct.voa.gov.uk/Search.aspx

Alice_Holt

tacpot12 said:

 I'm not sure why the benefit calculators have decided that the benefits cap won't apply you. Based on the information you have supplied, I think it will, but its not an area I'm expert in. Others with more expertise will be along shortly. 

    "You’re not affected by the cap if you or your partner:

• get Universal Credit and you and your partner earn £604 or more a month combined, after tax and National Insurance contributions "
  
  https://www.gov.uk/benefit-cap/when-youre-not-affected
  

lovebaking123

calcotti said:

You need to check the Local Housing Allowance which restricts the maximum housing element you can get and may be less than your rent 

The calculators I’ve used seemed to have taken this into account as they’ve shown me what the LHA is in our area.