Help! UC Stopped, Council Now Want The Whole Years Council Tax

tifo

Genex said:

As I had one of my lowest months when they closed it (£800), then I can only assume that I earnt over some kind of cumulative cap set around 8k

I assume they close CT support if income is over the AET. That's the case with me.

Genex

tifo said:

Genex said:

As I had one of my lowest months when they closed it (£800), then I can only assume that I earnt over some kind of cumulative cap set around 8k

I assume they close CT support if income is over the AET. That's the case with me.

It wasn't particularly clear to be honest. 

What I also never understood is the "minimum floor", which is the amount the expect you to earn - around £1250/month. If I earnt under that, I got nothing because I was expected to earn that much regardless. If I earnt more than that, I still got nothing, because I met the minimum floor.

tifo

Genex said:

It wasn't particularly clear to be honest. 

What I also never understood is the "minimum floor", which is the amount the expect you to earn - around £1250/month. If I earnt under that, I got nothing because I was expected to earn that much regardless. If I earnt more than that, I still got nothing, because I met the minimum floor.

The Minimum Income Floor (MIF) is what UC and CT expect you to earn if you're gainfully self employed, whether you actually do or not. It's calculated at min wage x 35 hours a week. So they'll base their CT support on that.

But for the first 12 months of a new claim, UC don't apply the MIF if it's a 'new' business. I don't know about existing businesses but they only used to give 12 months from when you started your self employment, if this was more than 12 months before you came to UC you had MIF applied. I don't know if this has changed.

NedS

Genex said:

tifo said:

Genex said:

As I had one of my lowest months when they closed it (£800), then I can only assume that I earnt over some kind of cumulative cap set around 8k

I assume they close CT support if income is over the AET. That's the case with me.

It wasn't particularly clear to be honest. 

What I also never understood is the "minimum floor", which is the amount the expect you to earn - around £1250/month. If I earnt under that, I got nothing because I was expected to earn that much regardless. If I earnt more than that, I still got nothing, because I met the minimum floor.

The minimum floor is the amount a person who is gainfully self employed is expected to earn, when calculating their entitlement to UC. It is based on how much that person would earn if they were working for minimum wage for 35h per week, so currently £1285.22 per month for someone aged 23 or over.

Once the MIF applies, anyone reporting earnings of less than that amount would be treated as if they are earning that amount. If you earn more than that amount, then the actual earnings will be taken into account. From what you say, once the MIF has been applied to your claim, there is no entitlement to UC. At that point, there is little point leaving your claim open as you are not going to be entitled to UC. How much you are actually earning isn't really relevant.

It's arguably a harsh view, but UC does not exist to support your business. If your business is unable to support you after the support you have received during your start up period, then you have a difficult decision to make - do you continue to trade in a situation where your business is unable to support you, or do you fold the business and take a job 35h/week at national minimum wage where you are able to support yourself.

Spoonie_Turtle

tifo said:

But for the first 12 months of a new claim, UC don't apply the MIF if it's a 'new' business. I don't know about existing businesses but they only used to give 12 months from when you started your self employment, if this was more than 12 months before you came to UC you had MIF applied. I don't know if this has changed.

This has changed, in September 2020.  You now get 12 months from when you claim UC if you are already self-employed when you claim.

tifo said:

I assume they close CT support if income is over the AET. 

OP was wondering why their UC had closed, which is what had the knock-on effect on their council tax.


Good news they're giving some time to get things sorted with the council tax, OP.

Genex

tifo said:

Genex said:

It wasn't particularly clear to be honest. 

What I also never understood is the "minimum floor", which is the amount the expect you to earn - around £1250/month. If I earnt under that, I got nothing because I was expected to earn that much regardless. If I earnt more than that, I still got nothing, because I met the minimum floor.

The Minimum Income Floor (MIF) is what UC and CT expect you to earn if you're gainfully self employed, whether you actually do or not. It's calculated at min wage x 35 hours a week. So they'll base their CT support on that.

But for the first 12 months of a new claim, UC don't apply the MIF if it's a 'new' business. I don't know about existing businesses but they only used to give 12 months from when you started your self employment, if this was more than 12 months before you came to UC you had MIF applied. I don't know if this has changed.

Right, so they expect me to earn that minimum and won't pay any money if I don't reach it, but if I do reach it, I've met their target and they don't pay me anything either :P

Genex

NedS said:

Once the MIF applies, anyone reporting earnings of less than that amount would be treated as if they are earning that amount. If you earn more than that amount, then the actual earnings will be taken into account. From what you say, once the MIF has been applied to your claim, there is no entitlement to UC. At that point, there is little point leaving your claim open as you are not going to be entitled to UC. How much you are actually earning isn't really relevant.

It's arguably a harsh view, but UC does not exist to support your business. If your business is unable to support you after the support you have received during your start up period, then you have a difficult decision to make - do you continue to trade in a situation where your business is unable to support you, or do you fold the business and take a job 35h/week at national minimum wage where you are able to support yourself.

Right, so either way the MIF means you get nothing. 

I completely agree, a business that can't sustain is a failure. I don't have a business in the conventional sense and I enjoy the freedom of freelance work and having multiple income streams and more control over my own finances. There are a few other benefits of leaving the UC account open too such as various discounts and service benefits. Of course there are many downsides too such as no holiday pay, no sick pay, no furlough etc. 

Spoonie_Turtle

Genex said:

tifo said:

Genex said:

It wasn't particularly clear to be honest. 

What I also never understood is the "minimum floor", which is the amount the expect you to earn - around £1250/month. If I earnt under that, I got nothing because I was expected to earn that much regardless. If I earnt more than that, I still got nothing, because I met the minimum floor.

The Minimum Income Floor (MIF) is what UC and CT expect you to earn if you're gainfully self employed, whether you actually do or not. It's calculated at min wage x 35 hours a week. So they'll base their CT support on that.

But for the first 12 months of a new claim, UC don't apply the MIF if it's a 'new' business. I don't know about existing businesses but they only used to give 12 months from when you started your self employment, if this was more than 12 months before you came to UC you had MIF applied. I don't know if this has changed.

Right, so they expect me to earn that minimum and won't pay any money if I don't reach it, but if I do reach it, I've met their target and they don't pay me anything either :P

The idea is that if you earn the MIF or above and still have some UC entitlement, they will pay that.

If your MIF is above the threshold for you to have any UC entitlement anyway (very possible for a single person or couple without children or rent), you'd really need to consider whether self-employment was working out.  Because if it's not, and you have nothing from UC, you'd need to find another way to support yourself.

Edit: though if it's not been 6 months of nil payable, or recalculated to be that, it still doesn't explain why they closed it.

Further edit (sorry): you can still apply for help with council tax on the basis of your actual income, if it's low enough.

NedS

Spoonie_Turtle said:

Edit: though if it's not been 6 months of nil payable, or recalculated to be that, it still doesn't explain why they closed it.

I'm pretty sure the automated claim closures after 6 months of NIL award are only for claims NILLED by employed earnings, not S/E earnings (although I could be wrong).

I suspect in this case a WC has decided there is no point keeping a claim open where the MIF is now applied and will NIL the award. Why would the claimant want to continue reporting their S/E income and expenses every month if they are never going to receive any UC. The claimant can reopen the claim if they disagree, but that's not going to change the outcome or underlying entitlement.

Spoonie_Turtle

NedS said:

Spoonie_Turtle said:

Edit: though if it's not been 6 months of nil payable, or recalculated to be that, it still doesn't explain why they closed it.

I'm pretty sure the automated claim closures after 6 months of NIL award are only for claims NILLED by employed earnings, not S/E earnings (although I could be wrong).

I suspect in this case a WC has decided there is no point keeping a claim open where the MIF is now applied and will NIL the award. Why would the claimant want to continue reporting their S/E income and expenses every month if they are never going to receive any UC. The claimant can reopen the claim if they disagree, but that's not going to change the outcome or underlying entitlement.

I wasn't aware of that (evidently) but that does make sense, thanks.

So OP, does the MIF apply to you?  If so, when did it start applying?