Self employed

YorkieDave

My wife and I are both self-employed. We've just managed migrated to UC. I made a profit of more than £2500 in the first calendar month of my UC claim and I'm about to declare it, having had my self employment interview. My wife hasn't had her self employment interview yet, so hasn't been asked for her income. She has made a loss in the first month of the UC claim. Will she be asked to report this later in respect of the first month? Does her loss offset my profit? Any advice appreciated!  

poppy12345

UC is based on earnings received each month. What you received prior to claiming UC is irrelevant. Going forward you will both need to report your earnings and expenses on your journal on the last day of each assessment period. https://www.gov.uk/self-employment-and-universal-credit

YorkieDave

poppy12345 said:

UC is based on earnings received each month. What you received prior to claiming UC is irrelevant. Going forward you will both need to report your earnings and expenses on your journal on the last day of each assessment period. https://www.gov.uk/self-employment-and-universal-credit

I meant in the first month of my UC claim. I've basically made £2500 profit and my wife has made £1500 loss this month. But I'm not sure if this will offset or how it works, especially as she hasn't been asked for her income or had a self-employment interview yet?

Yamor

Unfortunately, her losses cannot be set off against your profits.

peteuk

YorkieDave said:

My wife and I are both self-employed. We've just managed migrated to UC. I made a profit of more than £2500 in the first calendar month of my UC claim and I'm about to declare it, having had my self employment interview. My wife hasn't had her self employment interview yet, so hasn't been asked for her income. She has made a loss in the first month of the UC claim. Will she be asked to report this later in respect of the first month? Does her loss offset my profit? Any advice appreciated!  

Declaration of income is on the last day of your assessment period and you declare for that period, I dont see how or why she will need to declare a pervious months income ( or loss in this case) UC focuses on the assessment period.  

NedS

YorkieDave said:

My wife and I are both self-employed. We've just managed migrated to UC. I made a profit of more than £2500 in the first calendar month of my UC claim and I'm about to declare it, having had my self employment interview. My wife hasn't had her self employment interview yet, so hasn't been asked for her income. She has made a loss in the first month of the UC claim. Will she be asked to report this later in respect of the first month? Does her loss offset my profit? Any advice appreciated!  

She has to have the self-employment interview first (called a Gateway appointment). Until she has had that appointment, the system doesn't know that she is self-employed and required to report her income and expenses. Assuming you are at the end of the first assessment period (UC month), she will be asked to report her S/E income and expenses for that period as soon as the Gateway appointment has been completed.

This is not ideal,  but is quite common at the moment as a Gateway appointment is 1h long and there are a LOT of self-employed people migrating from tax credits, and not enough 1h appointment slots to see them all within the first month of their claim.

As stated above, your income and expenses are treated separately, so her losses cannot be offset against your profits.

YorkieDave

Thanks all. So now I know that her losses don't offset my profits, how does it work for the income assessment for us combined? Does her income class as 0 and mine £2500. If so, what then happens in the UC calculation? I presume we don't get any UC unless it's under transitional arrangements where we get what we would have done for tax credits?

peteuk

YorkieDave said:

Thanks all. So now I know that her losses don't offset my profits, how does it work for the income assessment for us combined? Does her income class as 0 and mine £2500. If so, what then happens in the UC calculation? I presume we don't get any UC unless it's under transitional arrangements where we get what we would have done for tax credits?

When is your assessment period? When it gets to the last day of your assesment period you need to enter the amounts so that it can calculate the UC your due, you will get a statement just before it is paid. 

As we dont know your full circumstances no one can really advise you on what happens to your UC.  Best thing to do is enter it into a benefit calculator that way you can enter the full details, housing, family size etc. and get a good understanding of your payment going forward.  

Equally I have noticed that the transition protection doesnt always apply or is applied prior to deductions. 

NedS

YorkieDave said:

Thanks all. So now I know that her losses don't offset my profits, how does it work for the income assessment for us combined? Does her income class as 0 and mine £2500. If so, what then happens in the UC calculation? I presume we don't get any UC unless it's under transitional arrangements where we get what we would have done for tax credits?

They start off by calculating your UC award before any deductions - this is the amount of UC you would receive if you had no income in the month. This will include any transitional protection element you are entitled to based on your previous tax credits award (which would have been based on last tax years earnings).

Then they make deductions based on your actual household earnings for the month. As you state, your partner has reported a loss in the month, so their income is £0. You have reported a profit of £2500, and as it is the first month there are no previous losses to be offset against this, so your income is £2500. The combination (£0 + £2500) will be used as your household income to calculate how much to reduce your UC by. If you do not qualify for any work allowances (excluded amounts of income for those with children or a health condition). a deduction of 55p in the pound will be made, so £2500 x 0.55 = £1375 will be deducted from your UC award. If there's anything left, that is what you will get paid (less any other deductions if you have taken an advance etc).

ElwoodBlues

It's probably also worth being aware of the 'minimum income floor, if you aren't already. Basically UC expects self employed people to have a monthly profit of at least the equivalent of full time hours @ NMW. Even if your wife made a loss/zero profit, UC will be calculated as though she earned nominal full time wage. Luckily, as new claimants/migration you will have the MIF requirements waived for the first 12 months of your UC claim. Start working on smoothing out both of your self employment monthly profits, otherwise it'll be rather a shock in a years time.