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Ltd Company Shareholder and Universal Credit

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Ltd Company Shareholder and Universal Credit

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Hi, 
I am looking for some advice regarding Universal Credit and whether I have to report to them as self-employed.
My husband and friend set up a ltd company last year, for which my husband is the Director. More recently, with the business having received investment from my family, I now have 28% shares in the company with my husband and friend on 36% each.
Initially, UC told me that I didn't need to declare to them as self employed as I am not working for the company, I just simply have shares. The only thing I would need to do would be to declare "other income" if and when I receive dividends. This seemed to make total sense.
However, I am now being told that I do need to report to them that I am self-employed and report the income and expenditure each month as I do for my husband. 
Really want to be sure that I do things correctly and having read as much info as I could find online, I am getting the impression that I only declare to UC as self-employed if I am actively working for the company.
Is anybody able to shed some light on this for me please? Apologies for the long post.
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  • calcotticalcotti Forumite
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    leannepink2303 said: However, I am now being told that I do need to report to them that I am self-employed and report the income and expenditure each month as I do for my husband. 
    If you report for yourself the same business income and expenditure as you do for husband there would seem to be a risk that it all gets counted twice so I'm not sure that is right.
    There are some posters who work in UC for DWP who may be able to clarify.
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Icequeen1Icequeen1 Forumite
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    The UC regulations only require you to declare as self-employed 'Where a person stands in a position analogous to that of a sole owner or partner in relation to a company which is carrying on a trade or a property business, the person is to be treated, for the purposes of this Part, as the sole owner or partner". I wouldn't say you are analogous to that of a sole trader or partner because you are just a shareholder. However, that raises an interesting question of what percentage of the income should then be apportioned to your husband for his self-employed earnings. 
  • leannepink2303leannepink2303 Forumite
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    calcotti said:
    leannepink2303 said: However, I am now being told that I do need to report to them that I am self-employed and report the income and expenditure each month as I do for my husband. 
    If you report for yourself the same business income and expenditure as you do for husband there would seem to be a risk that it all gets counted twice so I'm not sure that is right.
    There are some posters who work in UC for DWP who may be able to clarify.
    Thank you for your reply  :smile:
    Universal Credit have said that I would report 28% of the businesses income and expenditure and my hubby would report 36% as those are our share amounts.
    It does make sense, however, so did the initial advice which was that, as just a shareholder, I would not be classed as self-employed and would declare dividends as other income.
    Thanks again  :smile:
  • leannepink2303leannepink2303 Forumite
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    Icequeen1 said:
    The UC regulations only require you to declare as self-employed 'Where a person stands in a position analogous to that of a sole owner or partner in relation to a company which is carrying on a trade or a property business, the person is to be treated, for the purposes of this Part, as the sole owner or partner". I wouldn't say you are analogous to that of a sole trader or partner because you are just a shareholder. However, that raises an interesting question of what percentage of the income should then be apportioned to your husband for his self-employed earnings. 
    Thanks for you reply  :)
    I am just baffled by it all and concerned whatever action I take could be wrong and mess up my claim.
  • Icequeen1Icequeen1 Forumite
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    calcotti said:
    leannepink2303 said: However, I am now being told that I do need to report to them that I am self-employed and report the income and expenditure each month as I do for my husband. 
    If you report for yourself the same business income and expenditure as you do for husband there would seem to be a risk that it all gets counted twice so I'm not sure that is right.
    There are some posters who work in UC for DWP who may be able to clarify.
    Thank you for your reply  :smile:
    Universal Credit have said that I would report 28% of the businesses income and expenditure and my hubby would report 36% as those are our share amounts.
    It does make sense, however, so did the initial advice which was that, as just a shareholder, I would not be classed as self-employed and would declare dividends as other income.
    Thanks again  :smile:
    I would speak to a welfare rights specialist - i'm not convinced the 28% and 36% is correct when you have a situation where you are not caught by the provision that makes your husband self-employed. 
  • tomtom256tomtom256 Forumite
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    Shares are irrelevant as such, it's about control of the business and assets.
    Are the current profits split 50/50 between your husband and his partner or is it a 64/36 split?
    It's how any income and expedniture of the business is shared that is relevant.
    So when a partnership is involved, if a 50/50 split your husband would need to delcare his 50% and if it's a 64/36, he would just declare the 64%, as he is the self-employed person.
  • edited 6 May at 8:53PM
    hucksterhuckster Forumite
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    edited 6 May at 8:53PM
    A S/E person derives earned income from a 1. trade2. profession or 3. vocation
    Do you have any involvement in the running of this business  ( everyday business decisions or any business activities, however minor )  ?   Or are you only involved in shareholder meetings ?

    Based on what you have said, I think there is confusion about what has been said about your involvement in this business. 

    Suggest you go back to Universal Credit to clarify this.  If you are purely a shareholder, with no involvement in the businesses day to day running, then I don't see you would be noted as self employed on your UC claim.  Any dividends you received, same as any other investments would be capital and not earnings. 

    Agree with @tomtom256 that if you are not involved in the business then, it would be your husband and business partner who would be reporting income and expenses on a 50/50 basis, as it is their trade.
    The comments I post are personal opinion. Always refer to official information sources before relying on internet forums. If you have a problem with any organisation, enter into their official complaints process at the earliest opportunity, as sometimes complaints have to be started within a certain time frame.
  • calcotticalcotti Forumite
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    huckster said: If you are purely a shareholder, with no involvement in the businesses day to day running, then I don't see you would be noted as self employed on your UC claim.  Any dividends you received, same as any other investments would be capital and not earnings. 
    I started to post along similar lines but Have been trying to get my head around the reporting requirements in this situation.

    It seems that if you have two active participants in the business with 36% of the shares each and a passive shareholder with shareholder with 28% then OPs husband would only be treated as having 36% of the profit and OP should declare nothing.

    if however OP takes any role in the business she would then be treated as having 28% of the profit. 
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
  • Icequeen1Icequeen1 Forumite
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    calcotti said:
    huckster said: If you are purely a shareholder, with no involvement in the businesses day to day running, then I don't see you would be noted as self employed on your UC claim.  Any dividends you received, same as any other investments would be capital and not earnings. 
    I started to post along similar lines but Have been trying to get my head around the reporting requirements in this situation.

    It seems that if you have two active participants in the business with 36% of the shares each and a passive shareholder with shareholder with 28% then OPs husband would only be treated as having 36% of the profit and OP should declare nothing.

    if however OP takes any role in the business she would then be treated as having 28% of the profit. 
    I have also been thinking about this one - i still can't decide. The Regulations refer to someone who is analogous to a sole trader or partner. I don't think the OP is, so i don't think they are caught by Reg 77. 

    Where it gets tricky is whether her husband has to declare 50% of the income and expenses or 36%. The Regs say 'the income of the company or that person's share of the income is to be treated as the person's income',,,,,but i think that was written assuming everyone was active in the business.  

    It would seem to open up all sorts of potential problems with people structuring things in a certain way to avoid this look through provision if you can disregard the non-active shareholders and those left are only attributed the income/expenses on the basis of their shareholding. 

  • edited 6 May at 9:42PM
    calcotticalcotti Forumite
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    edited 6 May at 9:42PM
    It is a bit of a puzzle isn’t it? The content of your last paragraph is exactly the issue that is perplexing me because there does seem to be scope to rig things. I agree that if OP is not treated as self employed (and I agree that she appears not to meet the definition of not actively involved) then it would be logical for husband to be treated as having a 50% share but the guidance doesn’t make this distinction. The guidance also seems to take no account of the fact that there could be different share classes with different rights (although perhaps that has no practical significance for UC).
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
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