I feel like I'm being gaslit by the self employment team (UC)

seatbeltnoob

I'm in my startup period so there is no minimum income floor. So what they told me doesn't really affect me financially (thank god). But when I do come off the startup period. I think I'm going to butt heads.

I don't like the condescending tone some workers have, they've never been self employed themselves (probably), they dont know how the calculation works and you just havve to sit there and take a bollocking from them every 3 months.

My wife is on maternity in my bsiness, she gets statutory maternity pay (5 months left) of around £600 pcm. There was no work for her for a long time, she was on furlough all during covid and qualified for maternity. she has handed in her resignation so she will be paid SMP and then p45. I pay myself a wage of £800pcm, there is a surplus of £170 after that.

So the self employment expert tells me in a condescending tone that I'm making a very small amount of money, just £170 and I need to consider whether it's worth me making so little. If things dont change I will be required to find a job and give up self employment.

I told her technically my earnings is £970 which is a small amount away from the MIF, I'm paying my wife maternity and when she's off maternity My personal income will include that amount so I will easily meet the MIF amount. She heard what I said but didn't listen and then gave me this whole talk about it's my personal income that is the question, not househoild income.

Ok gave her the bit about matenity, it was pointless argueing over that. But I tried to make the point that the PAYE income I receive from my business is my self employment earnings. But they disagreed completely and kept reiterating that PAYE income is an expense, not income. They dont regard it as income and they come to a zero point, it gets added and subtracted as an expense.

I kept telling them it's in the handbook and I showed them the sentence exactly from the book. But they're just so arrogant and condescending that they just assume the claimant is a good for nothing idiot and can never be right.

I message them on the work journal asking them to clarify in writing so I could make a complaint. I ask them to clarify, is my self employment earnings £170 or £970. Can you repeat what you said. She refuses to ackowledge and just copy pasted one of the sections from the self employed manual. Put all the instances where it states PAYE income is an expense. She literally embolded every time expense comes up.

But the openning paragraph she pasted confirms my point of view exactly:

Business partnerships and directors

If you are running your business through a company that you own (including where you are a director) or receive any income from a company over which you have control, this is treated as self-employed earnings. You must report all money received in by the business and all payments out of the business each assessment period.

The whole self employment "speicalists" just ganged up on me, saying you're wrong. You dont add PAYE income. I told them it's my own ltd company that I receve the PAYE income from. WHy wouldnt you add it.

To clarify that we're not just talking semantics. I said if I got PAYE income from my own business of £1227 and there was £0 left over profit from the business would I meet the minimum income floor? They said no, you need to have self employed earnigs (profit) of £1227, the PAYE income doesn't count. I told them then that would meant I am earning more than £2400, double the minimum income floor.

I dont think they understood what I was telling them, and they were explaining the technical side of subtracting the PAYE income as an expense. I tried to explain it needs to be subtracted because it's already added on at the top. if you dont subtract it, the income gets added twice. But they weren't listening to me and I wasn't buying what they were telling me.

I ask them who do I take up with with because I think they are completely wrong and I njeed to complain, they would not give me any information, saying speak to the people at the front desk.

calcotti

seatbeltnoob said: I kept telling them it's in the handbook 

I’d be interested to know what you are referencing here. I was looking for confirmation of exactly this point recently and the guidance in Advice for Decision Makers is not clear and none of the examples in it include people taking money from the business as employees. 

seatbeltnoob

calcotti said:

seatbeltnoob said: I kept telling them it's in the handbook 

I’d be interested to know what you are referencing here. I was looking for confirmation of exactly this point recently and the guidance in Advice for Decision Makers is not clear and none of the examples in it include people taking money from the business as employees. 

this line:

Business partnerships and directors

If you are running your business through a company that you own (including where you are a director) or receive any income from a company over which you have control, this is treated as self-employed earnings. You must report all money received in by the business and all payments out of the business each assessment period.

I asked them how do I receive an income from my own business, THROUGH PAYE.

But every time I mentioned PAYE seems to be a buzzword for them that means you're working for someone else, not your "self employed business".

They kept badgering on about it being an expense, but the line where it said you need to expense it, explains after the comma, so that it does not get counted twice.

If you pay yourself a salary using the PAYE system, you should report this as an expense when reporting self-employed earnings, so that this amount is not counted twice.

I pointed to that, it needs to be expensed so that it isn't counted TWICE, because it is already counted once.

I also challened them on their notion, if you're right, then in order to not be jeorpardised by the minimum income floor. I shouldn't pay myself a salary, not make NI contributions (you have to receive a wage through PAYE to contribution to class 1 NIC). I have to leave the money in the business. She wouldn't say anything, but "well that's up to you, you control the money in your business"

seatbeltnoob

In my mind, the statement "or receive any income from a company over which you have control, this is treated as self-employed earnings" only has one interpretation. I cannot stretch or bend that phrase to mean anything else than PAYE earnings

Can you think of an alternative meaning to that?

calcotti

I’m not disagreeing with your interpretation - I am in complete agreement with it. Any other interpretation is completely illogical (and indeed unworkable).

However I’m still not clear what document you are quoting from.

EDIT - just realised it’s from here
https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/how-to-report-your-earnings-from-self-employment

Dazed_and_C0nfused

seatbeltnoob said:

In my mind, the statement "or receive any income from a company over which you have control, this is treated as self-employed earnings" only has one interpretation. I cannot stretch or bend that phrase to mean anything else than PAYE earnings

Can you think of an alternative meaning to that?

Could it not also be dividends (taken from from the company over which you have control)

calcotti

Dazed_and_C0nfused said:

Could it not also be dividends (taken from from the company over which you have control)

Actually dividends are completely ignored and should not be reported as either income or an expense.

calcotti

OP, any interpretation other than yours is unworkable because no one running a small company and paying themselves a salary would be able to escape the MIF and clearly that makes no sense.

The difficulty I have found when looking at this is the language used when talking about how income is reported and how UC payment is calculated is clear when it talks about employed and self employed earnings but the language used when referring to the MIF consistently refers to only self employed earnings and no where, that I can find, explicitly states that payments made through PAYE in these circumstances should be included as self employed earnings when calculating the MIF. 

Indeed guidance on the MIF explicitly states that where a claimant is employed and self employed the employed earnings should not be taken into account when calculating the MIF. The confusion then arises that payments received through PAYE are, by definition, employed earnings and should apparently be disregarded. But this is not consistent with treating a director of a company, who legally is an employee, as self employed.

seatbeltnoob

It wouldn't make sense to count dividends. It's basically a drawing from retained profits, the retained profits would have already been reported from earlier months. 

seatbeltnoob

Calcotti, do you think the staff are right on the matter as far as they are trained?

Seems a big mistake and it slipt through when formulating the guidance without anyone noticing.

seatbeltnoob

I want to write to someone at a senior level involved in making the guidance. Who would be the person to write to?

Secondly am surprised that mif has to be from self employed income. Surely it should be that the individual just has to make the mif however they can. If it means £600 from part time job in supermarket and £627 from food deliveries, why not?

Do you get a custom MIF of £627 from self employment or the full wack £1227.