Universal Credit as Director of Limited Company

jrtoolking

This is my first ever post on the MSE forum.
I run a small kitchen fitting company. It's a Limited Company with me as the sole director.  All we was going well until Lockdown 1. With time and no work I applied for Universal Credit and was surprised to receive over £1200 per month as a single parent caring for two children, one of which is disabled. 

My initial question is if I make no profit in my Limited Company can I still claim UC? Do I have to report money in and money out each month to UC. If the latter is required some months I have zero income and lots of expenses whilst other months I get paid for large jobs and have more income than expenses. Overall at the end of the tax year 19/20 I will have made a loss. The Limited Company pays me neither a wage or dividends. 

My follow up question is: can I continue to claim UC, run my Limited Company at a loss or break-even and pay any potential profits into a SIPP as an employer contribution.  

My impetus for this is that I want to have just enough to live on so I can home school my disabled son, but also contribute to a private pension. 

Thanks in advance.

KatrinaWaves

Eventually you will be subject to the minimum income floor, where your company will be expected to pay you at least NMW x full time.

After that you will be required to job search if the company is still not viable, depending on the age of your children/your caring responsibilities. This is currently suspended but will kick back in at some point 

 You cannot  just pay it all into a pension. UC isn’t really designed to prop up businesses that are not viable. 

jrtoolking

Thanks. I do seem to have been awarded UC in the era of Coronavirus.  Thanks for sign posting me to the minimum income floor and how that is going to be reintroduced when Covid support ends. I have been eligible for DLA for my 9 year old son since I adopted him at age 1, but never applied until now. I now qualify for the carers element of UC and my son gets DLA, low mobility and mid care.  So UC have told me I don't have to job search as I am a carer for my disabled son. My other child is 3.

I realise UC's aims: supporting financially challenged folks and getting them back to work. I'm really want to stay on the right of the benefits law. 

calcotti

jrtoolking said:

My initial question is if I make no profit in my Limited Company can I still claim UC? Do I have to report money in and money out each month to UC. If the latter is required some months I have zero income and lots of expenses whilst other months I get paid for large jobs and have more income than expenses. Overall at the end of the tax year 19/20 I will have made a loss. The Limited Company pays me neither a wage or dividends. 

You have to report all business income and expenditure every month. The difference is your ‘earnings’ for the UC calculation that month. UC is worked out monthly, not annually. If you have losses in a month they can be carried forward to offset high earnings later. High earnings in one month may produce surplus earnings which will affect later months.
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses

What happened in 2019-20 has no relevance to your UC claim.

calcotti

KatrinaWaves said: UC isn’t really designed to prop up businesses that are not viable. 

Indeed it is deliberately designed to avoid non viable self employment (although unfortunately this creates some inflexibility which can also reduce the support available for those with viable self employment).

huckster

On the last day of each assessment period, you should have a to-do on your list " report income and expenses ".
If you are not seeing this on your UC to do list, I would suggest that you report that you are self employed again and send a journal explaining that they are not asking you for your self employment income and expenses information each month.

calcotti

More information on Minimum Income Floor here https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/

Currently MIF is suspended until April 2021.

jrtoolking

Thanks all: I can see I have been able to bumble into UC without much questioning by my Coach. And since I am a carer of 35 hours plus a week have even less to answer for as far as looking for alternative work.  I am genuinely now trying to change my life work balance (another Covid wake up call!) by working less and caring for my two children more. I can summarise all your advice as:
1.when the minimum income floor rule is reinstated in April my payments will do down. 
2.now that I'm starting to work again and have income come back, make sure I fill out the income and expenses on my To Do List at UC and let their calculator figure it out.

I am still undecided about the legality (putting morals aside) of using employer based SIPP contributions to minimise my income on each months UC assessment period.

jrtoolking

Can I follow up on the minimum income floor. From my reading of it am I correct that it will not affect my claim (when it is reinstated in April) because I have children aged 3 and 9 plus I'm a 35+ hour carer for my son? 

garmeg

calcotti said:

jrtoolking said:

My initial question is if I make no profit in my Limited Company can I still claim UC? Do I have to report money in and money out each month to UC. If the latter is required some months I have zero income and lots of expenses whilst other months I get paid for large jobs and have more income than expenses. Overall at the end of the tax year 19/20 I will have made a loss. The Limited Company pays me neither a wage or dividends. 

You have to report all business income and expenditure every month. The difference is your ‘earnings’ for the UC calculation that month. UC is worked out monthly, not annually. If you have losses in a month they can be carried forward to offset high earnings later. High earnings in one month may produce surplus earnings which will affect later months.
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses

What happened in 2019-20 has no relevance to your UC claim.

The OP is the director of their own limited company. They are not self employed. Unless there is some nuance in UC that treats the former like the latter?

poppy12345

garmeg said:

calcotti said:

jrtoolking said:

My initial question is if I make no profit in my Limited Company can I still claim UC? Do I have to report money in and money out each month to UC. If the latter is required some months I have zero income and lots of expenses whilst other months I get paid for large jobs and have more income than expenses. Overall at the end of the tax year 19/20 I will have made a loss. The Limited Company pays me neither a wage or dividends. 

You have to report all business income and expenditure every month. The difference is your ‘earnings’ for the UC calculation that month. UC is worked out monthly, not annually. If you have losses in a month they can be carried forward to offset high earnings later. High earnings in one month may produce surplus earnings which will affect later months.
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses

What happened in 2019-20 has no relevance to your UC claim.

The OP is the director of their own limited company. They are not self employed. Unless there is some nuance in UC that treats the former like the latter?

For UC they are classed as self employed.