Cost Of Living Payment V UC Earning Below Minimum Income Floor

Spoonie_Turtle

slowcars said:

calcotti said:

slowcars said:
I ran a self-employed business and only worked when I wanted to. My profit/earnings were extremely low, but we still received full Disabled Tax Credits as though the business was thriving. They did not take into account the hours worked or money made. Then this MIF came in so I shut it down

But if you are disabled you would might be treated as having LCW or LCWRA in which case you would not be in the full work requirement category and therefore the MIF would not apply.

Being disabled does not necessarily mean that you are sick. Likewise, you can be sick and not disabled. By the time I was working again I had shut down my contributory IB/ESA claim.

LCW/RA have descriptors that can be met through physical disability without being ill. 

calcotti

slowcars said:

calcotti said:

slowcars said:
I ran a self-employed business and only worked when I wanted to. My profit/earnings were extremely low, but we still received full Disabled Tax Credits as though the business was thriving. They did not take into account the hours worked or money made. Then this MIF came in so I shut it down

But if you are disabled you would might be treated as having LCW or LCWRA in which case you would not be in the full work requirement category and therefore the MIF would not apply.

Being disabled does not necessarily mean that you are sick. Likewise, you can be sick and not disabled. By the time I was working again I had shut down my contributory IB/ESA claim.

Of course that is correct and I would never disagree with that. That’s why I said ‘might’ (but confusingly left a ‘would’ in place which I meant to delete!).

tifo

NedS said:

tifo said:

Some of how UC works is not in the real world, such as calculating expenses for every month and treating the remaining as monthly income, in a tax return you have expenses for the whole year. And if the remaining money is client money to be used on their behalf it's not really your income.

UC is a monthly benefit. HMRC and tax are calculated annually. Different government departments, completely different rules. I'm not sure why you are trying to draw comparisons between the two.

I was stung by this in the few months I tried going back to work during my illness.

In one month, I had £50 which a client gave to buy services for them at £5 a month for the next 10 months. This was not my income but to be spent in the coming months for the client. I declared this to UC as the money was there and I couldn't declare it was expenses because it hadn't been spent. Soon after I was eligible for mortgage interest support as i'd been on UC for 9 months. They refused the support saying i'd had income during this period. I said it wasn't income it was client money but they didn't accept it.

They offered mortgage support interest after the next 9 months but I didn't take it as it's a loan. But I needed it when I asked previously.

In my tax return it was an expense, in UC for that 1 month it was income to them.

UC also works differently to HMRC etc for company directors where the whole company income is seen as their income (100% or their share of the business) (same as self employed) but in actual fact they're an employee and the company is a separate legal entity. I know those are the rules for UC but they're not consistent with other rules.

Icequeen1

tifo said:

NedS said:

tifo said:

Some of how UC works is not in the real world, such as calculating expenses for every month and treating the remaining as monthly income, in a tax return you have expenses for the whole year. And if the remaining money is client money to be used on their behalf it's not really your income.

UC is a monthly benefit. HMRC and tax are calculated annually. Different government departments, completely different rules. I'm not sure why you are trying to draw comparisons between the two.

I was stung by this in the few months I tried going back to work during my illness.

In one month, I had £50 which a client gave to buy services for them at £5 a month for the next 10 months. This was not my income but to be spent in the coming months for the client. I declared this to UC as the money was there and I couldn't declare it was expenses because it hadn't been spent. Soon after I was eligible for mortgage interest support as i'd been on UC for 9 months. They refused the support saying i'd had income during this period. I said it wasn't income it was client money but they didn't accept it.

They offered mortgage support interest after the next 9 months but I didn't take it as it's a loan. But I needed it when I asked previously.

In my tax return it was an expense, in UC for that 1 month it was income to them.

UC also works differently to HMRC etc for company directors where the whole company income is seen as their income (100% or their share of the business) (same as self employed) but in actual fact they're an employee and the company is a separate legal entity. I know those are the rules for UC but they're not consistent with other rules.

If I understand you correctly, someone gave you £50 and you then incurred an expense of £5 a month which you used the £50 to pay? 

For tax purposes you would record that as income and then the corresponding expense. If you only declared it as an expense then that wouldn't be correct as it is missing the corresponding income transaction. 

tomtom256

Icequeen1 said:

If I understand you correctly, someone gave you £50 and you then incurred an expense of £5 a month which you used the £50 to pay? 

For tax purposes you would record that as income and then the corresponding expense. If you only declared it as an expense then that wouldn't be correct as it is missing the corresponding income transaction. 

They would then report it as an expense at is was used for UC as well. So not really sure how they got stung by this.

Icequeen1

tomtom256 said:

Icequeen1 said:

If I understand you correctly, someone gave you £50 and you then incurred an expense of £5 a month which you used the £50 to pay? 

For tax purposes you would record that as income and then the corresponding expense. If you only declared it as an expense then that wouldn't be correct as it is missing the corresponding income transaction. 

They would then report it as an expense at is was used for UC as well. So not really sure how they got stung by this.

yes, i meant to say that as well. But i guess the issue for UC is the timing in that the income and expenditure were in different periods. 

tomtom256

Sorry Icequeen1, wasn't aimed at you, I just couldn't understand how tifo had been stung by this £50 he had declared as income, as it would then become a permitted expense as he paid it out.

RRatchet

tomtom256 said:

Sorry Icequeen1, wasn't aimed at you, I just couldn't understand how tifo had been stung by this £50 he had declared as income, as it would then become a permitted expense as he paid it out.

They got stung because that £50 in that payment period/month was counted as their income in that period. Even though it wasn't their money to do what they wanted with and was ring fenced for their client. If in that claim period ie that month the £50 had been paid out on behalf of their client then as an expense their income would have been zero but it wasn't, it was paid out in the following claim periods therefore they had income. Mortgage interest help is only available if zero income for a certain amount of time.

I'm no expert so for accurate advice/help I suggest that folks go to the Facebook Group "Universal Credit and the Self Employed" and read Cathy's Briefing Paper plus other topics there.  I'm still on Tax Credits and will remain there to the bitter end as we will not qualify for UC. It'll be 'interesting' to see what arrangements are made for transitioning the "untidy  circumstances" people inc myself when TC stop.

tifo

RRatchet said:

They got stung because that £50 in that payment period/month was counted as their income in that period. Even though it wasn't their money to do what they wanted with and was ring fenced for their client. If in that claim period ie that month the £50 had been paid out on behalf of their client then as an expense their income would have been zero but it wasn't, it was paid out in the following claim periods therefore they had income. Mortgage interest help is only available if zero income for a certain amount of time.

This is correct. But what i meant was that in my tax return this £50 was 100% expense, in my UC for a month it was income and hence I got stung. I explained to them that it wasn't my money to use as I want because i needed it to use for the following 10 months.

At that time and in hindsight at the workings of UC, which i didn't know, it would have been better for the client to pay that expense themselves as I didn't make any money on it, they gave me £50 which i paid out. I normally didn't get involved with that particular client expense but in this case it was someone I know and they paid it to me in one go rather than having to pay themselves over 10 months.

Anyway, i posted just to say how i got stung with how UC works.

Spoonie_Turtle

RRatchet said:

Mortgage interest help is only available if zero income for a certain amount of time.

Of-topic but incidentally this is due to change, to a waiting period of 3 months and people will be able to claim with earnings.  However if someone has zero or close to zero income then they should perhaps be reconsidering their self-employment.

/End off-topic