UC - Lump Sum as pseudo-Dividends (sale bonus) from previous employer

Piggulito

I am on Universal Credit as Self Employed from a small company that only gives a few pounds of monthly profit and looking for a job at the same time. 
Every month I need to declare Profit and Losses from Self-Employement and at the same time, the UC will receive the PAYE that I might have (from £20 to £500 every month) to calculate my UC payment.
My previous employer has sold the company and as a part of my settlement agreement I am entitle to a payment of a few thousand pounds. I have already received the first £30k tax free more than 12 months ago. 

• How should I declare my previous company's  sale bonus I will receive for my UC?

(I know I will need to declare it on my tax-returns 2024-2025).

• I have to clear a Credit Card and pay for other expenses, is there anything that I can use to reduce my take-home pay?
  
  Thank you!

kaMelo

What are the payments for, golden handshake, redundancy, PILON etc?

Newcad

Piggulito said:

 I have already received the first £30k tax free more than 12 months ago.

As a £30k Lump sum?

Were you claiming UC at that time?

If so then did you declare the £30k to UC at that time?
(or declare any of it that was still left when you did claim UC?).

peteuk

The only thing you can do to reduce your take home pay is pay into a pension, if employer based it will be automatically deducted.
If taken privately and paid from a bank account, you can get it deducted from your reported income.  It’s not easy.

Your income from your employer is reported direct to DWP.  Your self employed income is reported by yourself on a monthly basis, people have asked previously about rolling over expenditure, etc etc.

Piggulito

kaMelo said:

What are the payments for, golden handshake, redundancy, PILON etc?

I received PILON and generous redundancy that we can call a Golden Handshake. I have already counted the £30k tax free on that payment. 
Apart from that, there was a component of the Settlement Agreement that would only happen if the company gets sold that is the payment that I have just received. 
I wasn't on UC when received the Settlement payment (Fiscal Year 2022/2023).

Piggulito

Newcad said:

Piggulito said:

 I have already received the first £30k tax free more than 12 months ago.

As a £30k Lump sum?

Were you claiming UC at that time?

If so then did you declare the £30k to UC at that time?
(or declare any of it that was still left when you did claim UC?).

I wasn't on UC by then.

Piggulito

peteuk said:

The only thing you can do to reduce your take home pay is pay into a pension, if employer based it will be automatically deducted.
If taken privately and paid from a bank account, you can get it deducted from your reported income.  It’s not easy.

Your income from your employer is reported direct to DWP.  Your self employed income is reported by yourself on a monthly basis, people have asked previously about rolling over expenditure, etc etc.

I am not on my old company payroll anymore. This payment I am getting now was written on my Settlement Agreement that included PILON, Settlement/Termination Payment and this extra payment on the sale of the company. 
Just note that I have already received the £30k tax free. Should I not count this new money received because it was part of the Settlement Agreement payment? Or that has already passed and this should be counted as a Self employment income? 

kaMelo

From what you've said I am assuming the paynent will be classed as capital rather than income by UC. When the agreement was is not relevant, for UC what matters is when you receive it. 

if your overall capital, including any other saxings you may have, is greater than £6000 it will reduce any UC you qualify for. If greater than £16000 your UC will end

Have you been deemed gainfully self employed or not?

peteuk

Piggulito said:

I am on Universal Credit as Self Employed from a small company that only gives a few pounds of monthly profit and looking for a job at the same time. 
Every month I need to declare Profit and Losses from Self-Employement and at the same time, the UC will receive the PAYE that I might have (from £20 to £500 every month) to calculate my UC payment.
My previous employer has sold the company and as a part of my settlement agreement I am entitle to a payment of a few thousand pounds. I have already received the first £30k tax free more than 12 months ago. 

• How should I declare my previous company's  sale bonus I will receive for my UC?

(I know I will need to declare it on my tax-returns 2024-2025).

• I have to clear a Credit Card and pay for other expenses, is there anything that I can use to reduce my take-home pay?
  
  Thank you!

Your contradicting yourself…

Piggulito said:

peteuk said:

The only thing you can do to reduce your take home pay is pay into a pension, if employer based it will be automatically deducted.
If taken privately and paid from a bank account, you can get it deducted from your reported income.  It’s not easy.

Your income from your employer is reported direct to DWP.  Your self employed income is reported by yourself on a monthly basis, people have asked previously about rolling over expenditure, etc etc.

I am not on my old company payroll anymore. This payment I am getting now was written on my Settlement Agreement that included PILON, Settlement/Termination Payment and this extra payment on the sale of the company. 
Just note that I have already received the £30k tax free. Should I not count this new money received because it was part of the Settlement Agreement payment? Or that has already passed and this should be counted as a Self employment income? 

So your take home pay is from your new employer, if you talking about your self employment “take home pay” then why mention at the same time UC receive my PAYE?  You’ve asked about reducing your take home pay, which I have answered.  

I’m not aware of the laws around taking £30K tax free, hence I’ve avoided commenting on it.  But what is important is what you’ve done with that £30K,  when was it received, when did you start claiming UC, how much you had left and what it was spent on…

Anything received now, as others have said will be classed as capital and so needs declaring.  If at the end of your UC assessment period you have either over £6K or £16K, this affects your UC payment.  However there has been debate on here as to what is allowed as DoC, so I won’t drag that up again.  But it may be worth spending some time searching for those threads, as there’s good advice on them.

Piggulito

Thank you for your replies. Trying not to be too explicit with names and private data.

I’m currently on PAYE as a Director of my company. The lump sum payment I’m referring to comes from a settlement I received from my previous employer when I left. I wasn't on UC when I received this settlement. I used the money to invest in my company and to pay off some regular commitments in advance, which helped reduce my capital below £16,000.

I would like to know how to declare this new bonus payment I received in gross amount from my previous employer to UC.

 (I have passed the "Start up period" but still making below the  Minimum Income Floor).

Newcad

Did you claim UC as a migration from Tax Credits, or for some other reason?

If it was a Managed Mifration from Tax Credits then did you have above £16k in capital.savings at migration?
(Your own not the business capital).

The answer to those can make a big difference to how savings of above £16k are treated in the first 12 months of UC.

PS. Whilst we do appreciate and respect the need for privacy we also do need details of circumstances to be able to give the right advice for those circumstances.
We are not being nosey; a question that is asked can have different 'right' answers depending on those other circumstances.