Self Employment & UC

Richie7

Evening All,

As I've had conflicting answers, I would be very appreciative if someone here could tell me if I'm eligible for Universal Credit or not. Or any other benefit help.

I am over 25, just become self-employed, and currently earning £720 per month. I'm living with my parents, have savings less than £16K, and have no dependants.

I obviously wouldn't be expecting a huge amount as I'm working some hours, but something/anything that will help with my outgoings and the likes of NI contributions at this time would be most welcome.

Many thanks as always,

Rich.

Spoonie_Turtle

Richie7 said:

Evening All,

As I've had conflicting answers, I would be very appreciative if someone here could tell me if I'm eligible for Universal Credit or not. Or any other benefit help.

I am over 25, just become self-employed, and currently earning £720 per month. I'm living with my parents, have savings less than £16K, and have no dependants.

I obviously wouldn't be expecting a huge amount as I'm working some hours, but something/anything that will help with my outgoings and the likes of NI contributions at this time would be most welcome.

Many thanks as always,

Rich.

Based on the information given, your potential UC payment would be the standard single person's allowance, £393.45.
55% of your earnings would be deducted, 55% of £720 = £396, so no, no entitlement to UC.

(Plus if your savings are over £6,000 there would be an additional £4.35 deduction for each £250 or part thereof above £6k.)

No entitlement to JSA as only £5/week of your earnings would be disregarded, meaning a deduction of ~£175/week.  JSA is £90.50/week.

No new claims for Tax Credits.
No entitlement to ESA or any disability elements of UC as you've not mentioned any disability or health condition.


I don't know what the NIC obligations are for self-employed people so can't confidently advise, but have a read of this page and see whether you would have to pay NICs or would be treated as having paid them  https://www.gov.uk/self-employed-national-insurance-rates

Richie7

Thank you for the response. 

Possibly what's thrown the ambiguity in is the Minimum Income Floor. If I put my details into the MSE benefits calculator, it says at the end I would be eligible for UC. Not much, about £50pm.

I'm a bit confused though when it applies, and not sure if it applies to me.

Richie7

Also, if I put into the MSE calculator that I'm contributing £50pm into a pension, it says I'm then entitled to some Universal Credit.

Spoonie_Turtle

The MIF doesn't come into the calculation I did.  If the MIF were applied your UC would be worked out based on earnings of ~£1735 per month or your actual earnings, whichever was higher.  As you can see from the previous calculation, the £1735 figure would totally wipe out UC entitlement.

I'm not sure how pension contributions are treated for self-employed people.

When using the benefits calculators, did you put in £720 as your profit per month, or did it ask for income and then for expenses?  (I've not used them for a self-employed calculation so I don't know.)

UC self-employed income works on the basis of gross income minus expenses each month, and the difference between the two is what they use as your earnings - which I assumed was £720 for you as that's what you said you're earning.  But we could have slightly different definitions of 'earning', so I just wanted to explain that just in case.

NedS

Spoonie_Turtle said:

I'm not sure how pension contributions are treated for self-employed people.

They are deducted in full, same as (they should be) for employed people.

There are boxes to enter the amounts of Tax, NI and pension contributions paid in each AP when reporting self employed income and expenses. The system will automatically deduct the amounts entered from the declared S/E income in determining their net earnings for the AP (income - tax, NI, pension conts & expenses)

Richie7

Thanks for the help guys.

I've been advised to just apply for it, and if I'm not entitled to anything I won't get it. And that's fair enough. I need to register as self-employed anyway so will do it after that and see what happens.