Self employed moving from tax credits to universal credit

nicaworks

Just been for my meeting where they are moving me over from working tax credits to universal credits - I am gainfully employed in their eyes and have a mitigated year during the process of moving over but I seem to have come across a flaw that will hit self employed people like me. 

I work all year in the tourism industry and most of our bookings are seasonal with the majority of our money coming in during a three to four month period. 

Working tax credits averaged this out throughout the year which was a fabulous system but now universal credits go month to month and I’m told that if I make good money one month, they will use that figure as my monthly earnings for every month of the year and therefore I won’t be intitled to U/Credit 

For example, a fisherman can’t go to sea in December/Jan/Feb because the weather is bad so he earns no money but in March the weather is great and he’s out at sea 24/7 making money. He earns £4000 that month … Universal credits will then take that £4000 as his monthly earnings for every month and he won’t be able to claim U/Credits whereas Working Tax Credits would have averaged the £4000 out over the four months mentioned giving a true picture of his earnings.

They suggested making my expenses during the months that I receive our income but if something breaks in November, I can’t wait till July to fix it! 

Is there any chance this situation could be rectified so Universal credits works in the same way as Tax Credits did - if not I know a lot of people down here in Cornwall are going to find their small businesses collapsing 

Alice_Holt

nicaworks said:

.... I’m told that if I make good money one month, they will use that figure as my monthly earnings for every month of the year and therefore I won’t be intitled to U/Credit 

 … Universal credits will then take that £4000 as his monthly earnings for every month and he won’t be able to claim U/Credits....

Is there any chance this situation could be rectified so Universal credits works in the same way as Tax Credits did - if not I know a lot of people down here in Cornwall are going to find their small businesses collapsing 

      No that's incorrect. That isn't the way the self-employed Minimum Income Floor (MIF) works.   Who told you that?

        After the 12 month period, UC will assume a minimum self-employment earnings monthly figure, even if you don't actually earn that amount.   This is not related to your maximum monthly earnings.

See - https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/


No change of the MIF changing IMO.

calcotti

UC is always calculated each month.
Each monthly payment will be calculated based on the higher of either
 - your 'earnings' based on your reported income and expenditure on a cash accounting basis, or
 - the MIF

ader42

You could think of it how in the 80s people went to sea for a few months and then signed on the dole for a while before going back to sea. And repeat.

People will get UC in periods that they have no other income and then get no UC when they have large incomes.

If you earn £4k one assessment period your claim will likely stop and have to be restarted in a future assessment period.

Not sure of timescales for this though, likely to be subjective on the part of the assessor? - e.g. would £4k be expected to last a claimant 1 month or 4 months? would 3 consecutive months of £4k income be expected to last 3 months or 6 months?

calcotti

ader42 said:. 

Not sure of timescales for this though, likely to be subjective on the part of the assessor? - e.g. would £4k be expected to last a claimant 1 month or 4 months? would 3 consecutive months of £4k income be expected to last 3 months or 6 months?

If there is no assessment of how long money is only to last, UC takes earnings onto account when received.

calcotti said:

UC is always calculated each month.
Each monthly payment will be calculated based on the higher of either
 - your 'earnings' based on your reported income and expenditure on a cash accounting basis, or
 - the MIF

Spoonie_Turtle

ader42 said:

Not sure of timescales for this though, likely to be subjective on the part of the assessor? - e.g. would £4k be expected to last a claimant 1 month or 4 months? would 3 consecutive months of £4k income be expected to last 3 months or 6 months?

There are surplus earnings rules so if you earn £2,500 over the amount which gives you a nil payment, they'll carry some over to the next assessment period (I can't remember how much).  The rules are set, no judgement calls needed.

ader42

Well that doesn’t sound too bad then, fishermen simply “pause” their claim while they are at sea and restart when they come back and keep upto £6k in savings for emergencies.  

Spoonie_Turtle

ader42 said:

Well that doesn’t sound too bad then, fishermen simply “pause” their claim while they are at sea and restart when they come back and keep upto £6k in savings for emergencies.  

The Minimum Income Floor is what makes it difficult - UC payments are calculated on either actual earnings or presumed earnings (the MIF), whichever is higher.  That means in fallow months they might only get a small UC payment despite earning not very much or nothing at all. 

Which may be fine if someone has earned enough in the boom months to tide them over and budgeted well, but can still be a shock if they're not prepared for the low UC payment in months without much/any income.