Help with WTC to UC migration

NedS

Sorry, I missed the part in your original post about you both being self employed. Self-employed earnings do not count towards the AET so the AET is not relevant to you or your partner if you are both self-employed.

When you make your claim for UC, you (and your partner) will each have a 1h appointment called a Gateway. At this appointment a work coach will have to decide if you are "gainfully" self employed. This means that (a) you are actually self-employed and not paid by an employer, and (b) that this is your main employment carried out with the intent of supporting yourselves.

If you are not deemed to be gainfully self-employed (for example, it's a hobby selling crafts you make on ebay), then you are a jobseeker and are expected to attend weekly appointments with a work coach to look and apply for full time work.

If you are deemed to be gainfully self-employed, you will be given 12 months to work towards developing the business so that it can support you - that means providing you with the equivalent of 35h/week x NMW of income (or £1410.89/month at 2023/24 NMW rates). During this 12 months you will meet with a work coach once every 3 months to discuss your progress towards this goal. You will report your income (profit after expenses) each month, and your actual incomes will be used when calculating how much UC you receive each month. After 12 months, the Minimum Income Floor (MIF) will be applied, which means they will assume you have earned a minimum of £1410.89/month regardless of whether you have or not, and use that figure as your income when calculating your UC if your actual earnings are less in the month.

There are 3 elements to Transitional Protection.

The first element is the transitional protection payment element. Broadly, this is designed to ensure that if the notional amount of UC you qualify for based on your circumstances is less than the amount of Tax Credits you were receiving, this TP element makes up the difference. It's a lot more complicated that that in reality as how much UC you receive will depend on your monthly earnings now, and how Tax Credits you received was based on your annual earnings in 2022/23. The transitional element payment lasts until it is eroded away by inflationary increases (called uprating), or a change of circumstance ends it.

The second and third elements of protection may not apply to you / be relevant. One ensures full time students who would not otherwise be entitled to claim UC can claim UC until their course ends. The second ensures that those migrating from non-means-tested benefits such as Tax Credits can claim UC for 12 months where they have capital (savings) over £16k which would normally prohibit them from claiming. If they still have over £16k in capital at the end of the 12 months, they would no longer be entitled to claim UC.

Whether you qualify for any UC payments or not will depend upon your earnings in each assessment period (UC month). No one makes a decision on this and you will find out at the end of the first month how much you will get that month once you have reported your self-employed income and expenses. The work out how much UC you would be entitled to if you had no income based on whether you are single/couple, have children, rent/own your property etc plus any TP element you are entitled to, and then this total figure is reduced by 55p in the pound for each pound of income you have - so if you have £1000 of income in the month, they would reduce the amount of UC by £550 assuming you were entitled to £550 in the first place.

Carefulspender1

NedS said:

Sorry, I missed the part in your original post about you both being self employed. Self-employed earnings do not count towards the AET so the AET is not relevant to you or your partner if you are both self-employed.

When you make your claim for UC, you (and your partner) will each have a 1h appointment called a Gateway. At this appointment a work coach will have to decide if you are "gainfully" self employed. This means that (a) you are actually self-employed and not paid by an employer, and (b) that this is your main employment carried out with the intent of supporting yourselves.

If you are not deemed to be gainfully self-employed (for example, it's a hobby selling crafts you make on ebay), then you are a jobseeker and are expected to attend weekly appointments with a work coach to look and apply for full time work.

If you are deemed to be gainfully self-employed, you will be given 12 months to work towards developing the business so that it can support you - that means providing you with the equivalent of 35h/week x NMW of income (or £1410.89/month at 2023/24 NMW rates). During this 12 months you will meet with a work coach once every 3 months to discuss your progress towards this goal. You will report your income (profit after expenses) each month, and your actual incomes will be used when calculating how much UC you receive each month. After 12 months, the Minimum Income Floor (MIF) will be applied, which means they will assume you have earned a minimum of £1410.89/month regardless of whether you have or not, and use that figure as your income when calculating your UC if your actual earnings are less in the month.

There are 3 elements to Transitional Protection.

The first element is the transitional protection payment element. Broadly, this is designed to ensure that if the notional amount of UC you qualify for based on your circumstances is less than the amount of Tax Credits you were receiving, this TP element makes up the difference. It's a lot more complicated that that in reality as how much UC you receive will depend on your monthly earnings now, and how Tax Credits you received was based on your annual earnings in 2022/23. The transitional element payment lasts until it is eroded away by inflationary increases (called uprating), or a change of circumstance ends it.

The second and third elements of protection may not apply to you / be relevant. One ensures full time students who would not otherwise be entitled to claim UC can claim UC until their course ends. The second ensures that those migrating from non-means-tested benefits such as Tax Credits can claim UC for 12 months where they have capital (savings) over £16k which would normally prohibit them from claiming. If they still have over £16k in capital at the end of the 12 months, they would no longer be entitled to claim UC.

Whether you qualify for any UC payments or not will depend upon your earnings in each assessment period (UC month). No one makes a decision on this and you will find out at the end of the first month how much you will get that month once you have reported your self-employed income and expenses. The work out how much UC you would be entitled to if you had no income based on whether you are single/couple, have children, rent/own your property etc plus any TP element you are entitled to, and then this total figure is reduced by 55p in the pound for each pound of income you have - so if you have £1000 of income in the month, they would reduce the amount of UC by £550 assuming you were entitled to £550 in the first place.

A belated thank you Ned for getting back to me on this - I'm not sure how I missed your reply but I did, so thank you again for taking the time out to make a detailed reply, it's very much appreciated. I've decided to wait until just after our last WTC payment in April and to then make a claim which is well within the deadline of 8th May.