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

Icequeen1

seatbeltnoob said:

Icequeen1 that's useful to know, as long as they are combining the wages from SE and SE profits together to calculate MIF then that will be my back stop if you like.

Qhat I was showing through calculations is that jobcentre staff are effectively disregarding my SE wages completely


They dint count is as employed wages and they disregard it as SE income because they believe its been expensed off.

That's the bit that I am not following - they do count as employed wages. You are employed and have employed earnings under the relevant regulation. They can't be disregarded. 

If they try and apply the MIF, then you need to ask for a mandatory reconsideration and point to Regulation 62 as i linked to above. 

Grumpy_chap

seatbeltnoob said:

Example below (assume there are no other expenses)

+£800 : Business makes TURNOVER of this amount

+£800 : Claimant receives £800 from business through PAYE

-£800 : PAYE earnings are deducted from turnover to correct this duplication

Even in this simplified example, the figures would be slightly adjusted to reflect Employer's NI.  

calcotti

Icequeen1 said:..You are employed and have employed earnings under the relevant regulation. They can't be disregarded. 

The guidance is therefore incorrect if it suggests that. 

If they try and apply the MIF, then you need to ask for a mandatory reconsideration and point to Regulation 62 as i linked to above. 

This is what the deposited paper in House of commons says
http://data.parliament.uk/DepositedPapers/Files/DEP2021-0835/010_Applying_the_minimum_income_floor_V16-0.pdf

Claimants who also work Pay as You Earn

When a claimant works both self-employed and employed, their Universal Credit is calculated using their combined earnings. The Pay as You Earn (PAYE) earnings are added to the reported self-employed earnings and the total taken into account or any applicable minimum income floor, whichever is higher.

The Pay as You Earn work hours are not taken into account when setting the minimum income floor.

Looking at this again I have misread it. It says the hours are not taken into account. In other words I think this means the MIF is calculated based on full time work and presumably the employed earnings are therefore taken into account too.

NedS

calcotti said:

Icequeen1 said:..You are employed and have employed earnings under the relevant regulation. They can't be disregarded. 

The guidance is therefore incorrect if it suggests that. 

If they try and apply the MIF, then you need to ask for a mandatory reconsideration and point to Regulation 62 as i linked to above. 

This is what the deposited paper in House of commons says
http://data.parliament.uk/DepositedPapers/Files/DEP2021-0835/010_Applying_the_minimum_income_floor_V16-0.pdf

Claimants who also work Pay as You Earn

When a claimant works both self-employed and employed, their Universal Credit is calculated using their combined earnings. The Pay as You Earn (PAYE) earnings are added to the reported self-employed earnings and the total taken into account or any applicable minimum income floor, whichever is higher.

The Pay as You Earn work hours are not taken into account when setting the minimum income floor.

Looking at this again I have misread it. It says the hours are not taken into account. In other words I think this means the MIF is calculated based on full time work and presumably the employed earnings are therefore taken into account too.

It means that if a person is both employed and self employed, and works 12h/week earning £500/month AND has a MIF of 35h and  £1227/month, then their income would be calculated as so:

Firstly, the WC would keep the MIF at 35h/week, and NOT reduce it on the basis they are working 12h/week. This is what it means when it says "The Pay as You Earn work hours are not taken into account when setting the minimum income floor." This makes sense as UC is all about earnings and not about hours worked.

Hence the MIF is based on 35h/week and equals £1227 (ish, from memory).

So the claimant is expected to have £1227 earnings in the month. If they have £500 from PAYE, they would be expected to have a further £727 from self employment to meet the MIF for the month. If they have more that £727 from S/E (more than £1227 combined), that higher figure will be used, and if it's less than £1227 combined, then the MIF figure of £1227 will be used.

Put simply, any PAYE earnings will count towards the MIF - they will not be expected to earn £500 PAYE and £1227 S/E MIF. UC simply wants you to have £1227/month in earnings and doesn't case if they come from PAYE or self employment, or a mixture thereof.

In the OP's case, if they have £970 money in the business after expenses and choose to pay this to themselves through PAYE, then they have £970 of PAYE earnings which count towards their required monthly income. If they retain that money in the business, then they report £970 profit which UC sees as self employed income - same result. However, where it is NOT the same is if they pay (some of) that money out to an employee as a wage, for example a £600 maternity payment to their spouse/partner, as now their profit is only £370 as £600 has been paid out to an employee as a business expense. So only the remaining £370 is left as profit and/or payable to themselves through PAYE, (unless the business has other retained capital it could use to fund a salary payment to themselves)

calcotti

Thanks Ned. I was hoping you would comment. 

To be clear then if the OP has PAYE earnings of £970 then the MIF will be applied and the earnings used to calculate the UC payable will be £1227.
OP appears to have been given the impression that the UC payable would be calculated on the MIF of £1227 plus the £970.

NedS

calcotti said:

Thanks Ned. I was hoping you would comment. 

To be clear then if the OP has PAYE earnings of £970 then the MIF will be applied and the earnings used to calculate the UC payable will be £1227.
OP appears to have been given the impression that the UC payable would be calculated on the MIF of £1227 plus the £970.

Correct, the MIF of £1227 would apply as the OPs earnings are below the MIF.

I can understand why a WC may make that mistake, but it is very much my understanding that any PAYE earnings count towards the MIF and are not in addition to the MIF.

seatbeltnoob

NedS said:

calcotti said:

Icequeen1 said:..You are employed and have employed earnings under the relevant regulation. They can't be disregarded. 

The guidance is therefore incorrect if it suggests that. 

If they try and apply the MIF, then you need to ask for a mandatory reconsideration and point to Regulation 62 as i linked to above. 

This is what the deposited paper in House of commons says
http://data.parliament.uk/DepositedPapers/Files/DEP2021-0835/010_Applying_the_minimum_income_floor_V16-0.pdf

Claimants who also work Pay as You Earn

When a claimant works both self-employed and employed, their Universal Credit is calculated using their combined earnings. The Pay as You Earn (PAYE) earnings are added to the reported self-employed earnings and the total taken into account or any applicable minimum income floor, whichever is higher.

The Pay as You Earn work hours are not taken into account when setting the minimum income floor.

Looking at this again I have misread it. It says the hours are not taken into account. In other words I think this means the MIF is calculated based on full time work and presumably the employed earnings are therefore taken into account too.

It means that if a person is both employed and self employed, and works 12h/week earning £500/month AND has a MIF of 35h and  £1227/month, then their income would be calculated as so:

Firstly, the WC would keep the MIF at 35h/week, and NOT reduce it on the basis they are working 12h/week. This is what it means when it says "The Pay as You Earn work hours are not taken into account when setting the minimum income floor." This makes sense as UC is all about earnings and not about hours worked.

Hence the MIF is based on 35h/week and equals £1227 (ish, from memory).

So the claimant is expected to have £1227 earnings in the month. If they have £500 from PAYE, they would be expected to have a further £727 from self employment to meet the MIF for the month. If they have more that £727 from S/E (more than £1227 combined), that higher figure will be used, and if it's less than £1227 combined, then the MIF figure of £1227 will be used.

Put simply, any PAYE earnings will count towards the MIF - they will not be expected to earn £500 PAYE and £1227 S/E MIF. UC simply wants you to have £1227/month in earnings and doesn't case if they come from PAYE or self employment, or a mixture thereof.

In the OP's case, if they have £970 money in the business after expenses and choose to pay this to themselves through PAYE, then they have £970 of PAYE earnings which count towards their required monthly income. If they retain that money in the business, then they report £970 profit which UC sees as self employed income - same result. However, where it is NOT the same is if they pay (some of) that money out to an employee as a wage, for example a £600 maternity payment to their spouse/partner, as now their profit is only £370 as £600 has been paid out to an employee as a business expense. So only the remaining £370 is left as profit and/or payable to themselves through PAYE, (unless the business has other retained capital it could use to fund a salary payment to themselves)

Thanks for the clarification, just to add.

Paye to me: £800

PAye to my wife (maternity): £600

Surplus left (or SE profits as per UC tretment): £170

It looks like I will just put up with the derisory remarks that I've only made £170 all month, the mechanisms in place will still work correctly as intended.

seatbeltnoob

calcotti said:

Thanks Ned. I was hoping you would comment. 

To be clear then if the OP has PAYE earnings of £970 then the MIF will be applied and the earnings used to calculate the UC payable will be £1227.
OP appears to have been given the impression that the UC payable would be calculated on the MIF of £1227 plus the £970.

Yup that is exactly what they told me. I asked them to clarify, I even asked them to clarify this on the work coach message via the UC system and they replied back copy pasting the manual and not addressing my specific questions.

NedS

seatbeltnoob said:

Thanks for the clarification, just to add.

Paye to me: £800

PAye to my wife (maternity): £600

Surplus left (or SE profits as per UC tretment): £170

It looks like I will just put up with the derisory remarks that I've only made £170 all month, the mechanisms in place will still work correctly as intended.

Yes, spot on. So you have £970 of monthly earnings that would count towards your MIF. And you are correct, regardless of what I or your WC may think, the system calculates it all automatically so there is no scope for anyone to actually make a mistake wrt your actual payments.

calcotti

NedS said:... the system calculates it all automatically so there is no scope for anyone to actually make a mistake wrt your actual payments.

That’s useful to know.