Universal Credit rules with a start up business

Hi.
My situation is that I could be receiving a nice redundancy payment very soon. It will be in the region of 40k. My thoughts are that I want to open a retail shop with the money.
So my question is can I use this money to start up my business and still be able to claim UC?
My understanding is that I can open a new business and for the first year claim UC with no wage consideration. After the first year I can claim UC against at least minimum wage. I have a family to support so the regular income would be invaluable. 
However, I know that my redundancy payment will put me well above the UC savings threshold of 16k. But if I were to invest the 40k into setting up the business, will that disqualify me from being able to claim UC? I find the savings rule a bit vague as to where the money is. It says if I have investments then they are classed as savings I think.

I realize that there are a few boards on here that this could fit, but this feels the most logical.
Thanks in advance


Comments

  • NedS
    NedS Posts: 4,295 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    Under normal circumstances, as you say with a redundancy of £40k you would not be eligible to claim UC.
    If you start a business, a decision maker will make a decision if the £40k (or whatever is left of it after startup costs) can be disregarded. Assets essential to the business can be disregarded in full. However, what you can not do is say you have started a business to try to shield your capital whilst claiming UC. You must declare the capital and then explain why it is essential to the running of your business.
    You seem to misunderstand how your earnings will be treated. For the first year your earnings will be taken into account in the normal way and your UC will be reduced each month based on your earnings. As a self employed person, your earnings are deemed to be the income into the business minus the expenses out of the business, on a month by month basis. After a year, assuming it has been reintroduced by then, the Minimum Income Floor (MIF) would likely apply.
    The 'saving rule' is simply asking how much capital you have, which includes cash in your pocket, the balance of all bank accounts, savings accounts, ISAs, investments (not in a pension), online accounts (paypal, betting accounts), property (other than the property you live in), land etc. The combined total value is your capital, and if it is greater than £16k you are not entitled to claim UC unless any of it can be disregarded for a specific purpose
  • calcotti
    calcotti Posts: 15,696 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Danosaur said:..After the first year I can claim UC against at least minimum wage. I have a family to support so the regular income would be invaluable. ..
    If you mean that UC will pay you at least minimum wage you have misunderstood the Minimum Income Floor. When this applies you are treated as if you are earning at least national minimum wage (generally for 35 hours/week) even if you are earning less. Depending on what your maximum UC entitlement is this may mean that no UC is payable.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
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