ESA/PIP (enhanced both) have been offered a business as someone is retiring but need some advice?

mostlyrandom

Hello there,

First post on MSE!

Let me start by saying that I receive ESA (Income-based, support group) and PIP living and mobility at enhanced rates.

I won't bore people with the background, surgeries, and mental health issues.

I don't wish to be in this situation where my income is limited to what it is for the remainder of my life (currently 38), but I also still don't feel well enough just to go and work for someone else full-time, if I could even find a job where I live (The South West) that even covers what I currently receive. Especially with such a huge gap in my employment history.

I've had someone approach me that is retiring and is willing to give me his business. It's a web design business, but actually, most of the income is residual (hosting for website files, for the non-technical types think self-storage that requires very little maintenance).

It's a small business, not mega money. Last year I think he did about 17k, with some costs to take out of this. The overall amount, I would imagine would be very close to if I did the £167 per week permitted work whilst still receiving ESA. The benefit to me is that I could own a business that I can try and grow and get myself out of this situation I currently feel trapped in.

I read somewhere that there were schemes for helping people off of benefits and running their own businesses but I don't think such a thing exists for ESA.

The lady I spoke to briefly at the JC said that if I came off ESA I wouldn't be able to go back onto it, so if the figures aren't right or it all goes wrong I'm basically screwed.

I'm not sure what to do, I desperately would love to take this opportunity but there's no way I can just stop claiming ESA and survive on the projected money due to come in from this business, many of his clients have already paid for the year.

Is there a scheme to help people to become self-employed I might be able to take part in?

Is it possible I could set up an LTD company and pay myself the £167 a week permitted work alongside my ESA to see if it's even viable? He was a sole trader so I'm relying on figures he's giving me and that assumes 100% client retention. Either way, it's a massive risk and I don't want to fall foul of any laws, etc. Or would it be seen that because I'm part of a limited company ALL of the money that comes in is mine, even though I'd technically only be getting paid the permitted work amount, and then there are still business expenses to account for (not for me as a PAYE but just any funds in the business bank account).

Would an accountant maybe have a way of working something out that abides by all rules/regulations possibly?

I really want to get some normality back to my life because this has been a total of about 8/9 years in the making if you include the pain/issues before the spinal surgery.

Alice_Holt

You may want to get some advice on moving to UC from ESA.

If you apply for UC whilst your ESA claim is ongoing, then you should be placed in the LCWRA group (without an assessment). This is the equivalent of the Support Group in ESA.

The advantage of UC is that there is no earnings limit (as with PW with ESA) and you don't need to get pre-authorisation for work (as with PW). I don't think the Self Employment Minimum Floor applies to those in the LCW and LCWRA groups - but do check.

Are you in receipt of any ESA premiums (SDP, EDP ??).  If so then check with your local advice charity about any transitional protection.
Are you in receipt of HB ?

An accountant may not be the best professional to speak to about the impact of self-employment on benefits. I'd start (after you have done some research on UC by getting advice from your local advice charity.

Use a benefits calculator to get some idea of likely income from UC. On that level of earnings, I think, the work allowance would mean that most earnings would not be subject to the % reduction (but also depending on whether a Housing Allowance is paid)

https://www.citizensadvice.org.uk/benefits/universal-credit/before-you-apply/moving-to-universal-credit-from-other-benefits/

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit/Switching-to-Universal-Credit

https://www.entitledto.co.uk/help/transitional-protection-universal-credit#:~:text=Severe Disability Premium and transitional elements&text=The block was put in,claimants who move to UC.

https://www.gov.uk/government/publications/universal-credit-work-allowances/universal-credit-work-allowances

https://www.gov.uk/benefits-calculators

Spoonie_Turtle

Alice_Holt said:

You may want to get some advice on moving to UC from ESA.

If you apply for UC whilst your ESA claim is ongoing, then you should be placed in the LCWRA group (without an assessment). This is the equivalent of the Support Group in ESA.

… I don't think the Self Employment Minimum Floor applies to those in the LCW and LCWRA groups - but do check.

That's correct, they cannot be deemed gainfully self-employed so the MIF cannot apply.  Makes UC much more viable for self-employment than if the MIF applied.

mostlyrandom

Hello, @Spoonie_Turtle and @Alice_Holt

It does sound like UC would well be the way forward. It was always painted to me as something the Torys wanted to force in to lower the amount of money people receive from benefits and alike. It does appear from first glance that if I wasn't going to work as well I would be about £1100 per year worse off on UC than the old-style benefits.

I'm going to need to speak to someone about it all I think. Honestly, being able to do some work and take over this business and hopefully build it into something would be amazing.

Am I right in thinking that UC would be calculated per earning period, for example, every month, If the MIF didn't apply to me or I was in the 12-month grace period where MIF doesn't seem to apply anyway? Could it be the case that abysmal business earnings would be propped up again by UC to a certain level? Essentially giving me a liveable income.

To be honest, I wish I knew about it earlier. I can't tell you how trapped I felt with all of this.

Alice - yes I do get a SDP which I think is worth maybe £60-70 a week at the moment and do receive HB.

Is there anyone, in particular, you think I'd be best to speak with in the first instance? There's a CAB in the local town center. Would Citizen's advice be the only real option? I've had very limited interaction with advisors of any kind. Claims were made, assessments were done and I've been left alone for the most part so I'm not sure who I could take all of my figures/situation to and explain what I was considering doing and get their input on whether it's as good or bad idea and possible next steps.

I used the find an advisor on the TTUS website and it gave me CAB or the JC. I'm thinking CAB might be a better option than the JC?

Alice_Holt

"Am I right in thinking that UC would be calculated per earning period, for example, every month, If the MIF didn't apply to me or I was in the 12-month grace period where MIF doesn't seem to apply anyway? Could it be the case that abysmal business earnings would be propped up again by UC to a certain level? Essentially giving me a liveable income."

  Yes, UC has a monthly assessment period.  You will need to supply details of business income and expense (on a cash basis). The MIF won't apply if you remain in the LCW / LCWRA groups.
   
https://www.gov.uk/self-employment-and-universal-credit


"I do get a SDP which I think is worth maybe £60-70 a week at the moment and do receive HB."

The SDP will attract  transitional protection, but this will erode over time (see links in earlier post).
Be aware that UC (including the housing element) is paid in arrears, so there will be a gap between the 2 week run on of HB and your first UC payment.  

"I used the find an advisor on the TTUS website and it gave me CAB or the JC. I'm thinking CAB might be a better option than the JC?"

  Yes, JC staff aren't trained to give detailed benefits advice. Neither are the DWP call-handlers.  If you do decide to take up the business and claim UC, then I'd suggest getting help from:
https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/help-to-claim/
Be aware that your local Cit A is predominately a volunteer charity, and will be facing a great demand on its resources. You may need to be patient. Also check for any local welfare / law centres.

You are right to tread carefully, and be very sure of outcomes before switching from ESA to UC. But as Spoonie says - in your position as self-employed UC may well be more viable, than the strict restrictions around PW on ESA. 

4justice2

For a complex issue like this best to see if you can find a specialist benefits advice service. CAB is a general advice service and their advisors vary in expertise, I'd avoid.

mostlyrandom

Would you have any suggestions at all on which company/people to speak with? I've spoken to CAB, who said I might get re-assessed even though I'm in the support group in ESA when moving to UC.

It's tricky as well because the business is
1) 90% residual income. It's just providing web hosting space for clients.
2) I might have to update a few plugins each month, per site, but you're talking about maybe a couple of work per week.
3) It's something I can do from home so it's perfect due to my mobility issues.

Like it's the perfect thing to be offered.. some clients might leave, but it's still a decent amount of money, or at least should be.

The figures CAB gave me differ to the figures I get from tts and entitleto which just further complicates the problem. We both use the same details, 100% but her calculation gives me £150 less UC per month in the example I used.

She also said that there was no "upper limit" to when one would just not be eligible for any UC that month.

I can honestly see why people just stuck with where they're at, resign themselves to being depressed and trapped, and basically lose all hope.