As a director of a family company with no share in the company, do I am self employed?

Hamidrez

As a director of a family company with a fixed salary, and no share in the company, I am not sure if I am considered self-employed for Universal credit purposes? 

calcotti

I think you will be an employee if you have no control over the running of the company. I assume your salary is paid through PAYE.

tifo

Hamidrez said:

As a director of a family company with a fixed salary, and no share in the company, I am not sure if I am considered self-employed for Universal credit purposes? 

From what i've seen, company directors are seen the same as self employed in UC for the share of the business they own. Hence the income of the business after expenses. May not apply to you as you say you own no shares in the company.

There are provisions in the Universal Credit Regulations 2013 (“the UC Regulations”) which apply to company directors. The key provision is regulation 77, entitled “Company analogous to a partnership or one person business”. Although the title does not make it clear, regulation 77 is intended to encompass company directors:

77. — (1) 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.

In other words, if the company director is akin to a sole trader, or partner in a partnership, in relation to a company which is carrying on a trade (or a property business), they are treated as if they are a sole owner or partner.

Regulation 77 allows the income of a company to be treated as self-employed earnings where the claimant “stands in a position analogous to that of a sole trader or partner in relation to a company which is carrying on a trade or a property business”. In such cases, the claimant is treated as if they were the sole owner or partner of the company for UC purposes. The intention is to treat them the same way as a self-employed person who has not set up a company to conduct their business.

tifo

Hamidrez said:

As a director of a family company with a fixed salary, and no share in the company, I am not sure if I am considered self-employed for Universal credit purposes? 

This page is for your position

https://www.accountingweb.co.uk/any-answers/director-not-shareholder-and-uc

NedS

Hamidrez said:

As a director of a family company with a fixed salary, and no share in the company, I am not sure if I am considered self-employed for Universal credit purposes? 

As a company director, you are potentially self employed - a decision maker will decide. So you should declare self employment and employment when making your claim...

calcotti said:

I think you will be an employee if you have no control over the running of the company. I assume your salary is paid through PAYE.

...and as @calcotti says they will likely decide that you are an employee if you have no control over the day to day running of the company - but that's for them to decide, not you.

calcotti

NedS said:.... - but that's for them to decide, not you.

I should have made that clear.

NedS

calcotti said:

NedS said:.... - but that's for them to decide, not you.

I should have made that clear.

My comment was aimed at the OP, not you @calcotti (for clarity)

calcotti

NedS said:

calcotti said:

NedS said:.... - but that's for them to decide, not you.

I should have made that clear.

My comment was aimed at the OP, not you @calcotti (for clarity)

I realised, nonetheless I think I should have said that.

seatbeltnoob

going by memory, the profits of the business is deemed to be your income based on the share you own.

Which I think is a pretty fair ssystem. If you are a sole owner operater ltd. then 100% of the company's profits will be your income for UC. If you are a 50:50 partner in a ltd, then 50% of the profits will be your personal income for UC purposes.

if you own 0% then you own nothing. Therefore you are not self employed.

It's a bit weird position though, as a director you can earn below minimum wage.

If they class you as an employee you need to make minimum wage in the miniumum hours you're expected to work. Or else they will expect you to get a second job and put you on a job search. Because you're just an employee who isn't working full time in their eyes.

If they class you as self employed person, they will impose a minimum income floor on you.