experience with tax credit migration to universal credit and a MIF question?

christhefatcat

Hi all, this could help someone. Below is as far as I understand and my experience.
You got the migration notice to move from TC to UC.
Move week before the last payment of TC.
It could take 2 weeks to complete the application. 

Meanwhile you can get a loan from DWP equal to one months UC, you pay that back every month from UC over 2 years.
You will get a meeting to confirm who you are and to look at your self employment, it’s not invasive or complicated.
Great with this confirmed…

You are gainfully self employed, gainfully, you expect to make a profit.

You will get the full amount plus an amount for having to migrate. The ceiling as gainfully self employed and adult over 21 would be £500.

The start up period will last 12 months. 

You will get 4 meetings, a meeting every 4 months in the year with a DWP coach. You can ask also questions in the UC website.
Every month you add what you have earned followed by your expenses, the website works out your profit.
The profit is then used to work out your UC entitlement. 

Profit calculation is for every £1 — 55p is deducted from the ceiling amount of £500.
To get the full amount always spend the profits on stock as in any self employed business it is important to always reinvest the profits. 

Keep the receipts, you may need them for any review.
UC is meant to top up what you earn from self employment until you don’t need it.

Question is start up is coming to an end.
The MIF how does that affect the amount every month…. 

When you do not meet the MIF do you end up with zero or ? 

I will have part time work to consider. 

I have asked and the a DWP coach and they didn’t give a straight answer.

Thanks in advance, have a great 2025

NedS

christhefatcat said:

Question is start up is coming to an end.
The MIF how does that affect the amount every month…. 

When you do not meet the MIF do you end up with zero or ? 

I will have part time work to consider. 

I have asked and the a DWP coach and they didn’t give a straight answer.

Thanks in advance, have a great 2025

Once the start up period has ended, your UC entitlement will be calculated using the MIF or your profits, whichever is higher.

If you continue to "reinvest your profits" to reduce your income, they will just assume the MIF as your earnings which will likely NIL (or greatly reduce) the amount of UC you receive.

As you said, after 12 months you are expected to have developed your business to the point where you no longer need tax payers support (not to mention the many years you've had on Tax Credits to do that)

christhefatcat

Thanks NedS.

I am also looking for stories from people who have gone through this process.

My business is fine, has been for many years now. Within my small business I work in fashion reselling, small consignment, designer fashion. It is on a small scale, pays the bills. 

I will have to scale this bigger. 

I will add what happens in detail to my UC to this post, to help others going through this process. 🙂

peteuk

You will need to prove your gainfully self employed, if your failing to reach the MIF in your start up year, you will be asked to meetings to show how you would reach this.

However the minute you apply, your TC will stop.  You will then be given an in year review of your TC.  Your UC will then take that date (or the following day) as the first day of your assessment period.  So for instance apply 10 Jan, 1pm your assessment period may be 11 Jan - 10 Feb.  Your first payment will be 5-7 days after so likely to be 17 Feb.  That will set your monthly assessment period and payment date (give or take weekends/bank holidays) 

You will be asked to declare your earnings on the last day of your UC assessment period and as you say reduced 55p per pound from your UC

if your not found gainfully self employed you will need to seek X hours of employment (depending on circumstance) 

christhefatcat

peteuk said:

You will need to prove your gainfully self employed, if your failing to reach the MIF in your start up year, you will be asked to meetings to show how you would reach this.

However the minute you apply, your TC will stop.  You will then be given an in year review of your TC.  Your UC will then take that date (or the following day) as the first day of your assessment period.  So for instance apply 10 Jan, 1pm your assessment period may be 11 Jan - 10 Feb.  Your first payment will be 5-7 days after so likely to be 17 Feb.  That will set your monthly assessment period and payment date (give or take weekends/bank holidays) 

You will be asked to declare your earnings on the last day of your UC assessment period and as you say reduced 55p per pound from your UC

if your not found gainfully self employed you will need to seek X hours of employment (depending on circumstance) 

Thanks. I am already gainfully self employed, have been for years. Just never scaled the business up.
I will ask in my next scheduled meeting. 

I expect to make money but no where near to the MIF at the moment.

Complicated? It is the examples they use they do not show what happens to your benefit amount if you do not meet the MIF. If it is zero payment a month then fine I am ok with that.
I am very surprised I cannot find any definitive answer or cases online about what happens.

poppy12345

christhefatcat said:

peteuk said:

You will need to prove your gainfully self employed, if your failing to reach the MIF in your start up year, you will be asked to meetings to show how you would reach this.

However the minute you apply, your TC will stop.  You will then be given an in year review of your TC.  Your UC will then take that date (or the following day) as the first day of your assessment period.  So for instance apply 10 Jan, 1pm your assessment period may be 11 Jan - 10 Feb.  Your first payment will be 5-7 days after so likely to be 17 Feb.  That will set your monthly assessment period and payment date (give or take weekends/bank holidays) 

You will be asked to declare your earnings on the last day of your UC assessment period and as you say reduced 55p per pound from your UC

if your not found gainfully self employed you will need to seek X hours of employment (depending on circumstance) 

Thanks. I am already gainfully self employed, have been for years. Just never scaled the business up.
I will ask in my next scheduled meeting. 

I expect to make money but no where near to the MIF at the moment.

Complicated? It is the examples they use they do not show what happens to your benefit amount if you do not meet the MIF. If it is zero payment a month then fine I am ok with that.
I am very surprised I cannot find any definitive answer or cases online about what happens.

Your UC entitlement will be based on your MIF what ever that is set at. If your earnings are less than that then that then your UC will still be based on that and could reduce your entitlement to zero. 

If your earnings are over the MIF it will be your earnings they will use. I'm not sure why you can't find information online about this, a google search found these links.
https://www.turn2us.org.uk/jargon-buster/minimum-income-floor

https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/universal-credit-and-self-employment-quick-guide#how-your-universal-credit-payments-are-calculated

christhefatcat

If anyone is interested in more complicated Universal Credit questions and answers please do go to this website

rightsnet .org.uk / forums

Spoonie_Turtle

christhefatcat said:

peteuk said:

You will need to prove your gainfully self employed, if your failing to reach the MIF in your start up year, you will be asked to meetings to show how you would reach this.

However the minute you apply, your TC will stop.  You will then be given an in year review of your TC.  Your UC will then take that date (or the following day) as the first day of your assessment period.  So for instance apply 10 Jan, 1pm your assessment period may be 11 Jan - 10 Feb.  Your first payment will be 5-7 days after so likely to be 17 Feb.  That will set your monthly assessment period and payment date (give or take weekends/bank holidays) 

You will be asked to declare your earnings on the last day of your UC assessment period and as you say reduced 55p per pound from your UC

if your not found gainfully self employed you will need to seek X hours of employment (depending on circumstance) 

Thanks. I am already gainfully self employed, have been for years. Just never scaled the business up.
I will ask in my next scheduled meeting. 

I expect to make money but no where near to the MIF at the moment.

Complicated? It is the examples they use they do not show what happens to your benefit amount if you do not meet the MIF. If it is zero payment a month then fine I am ok with that.
I am very surprised I cannot find any definitive answer or cases online about what happens.

If you don't meet the MIF they use the MIF instead of your actual earnings to make the earnings deduction from your maximum UC amount. 

Your maximum amount will depend on your circumstances.

Let's say it's just you on your claim, no health conditions or dependant children or care responsibilities
Standard allowance £393.45
MIF amount £1,735.07
£393.45 - (£1,735.07 x 55%)
= £393.45 - £954.28
= Nil award

But if you have rent on top of the standard allowance, the result will be different because your starting amount, the max UC award, will be higher.


Or, to complicate it, let's say it's you and a dependant child.  You now have the work allowance, which amount will depend on whether you claim help for housing costs or not.  For the sake of simplicity for this example let's say you don't.

So maximum UC = standard allowance £393.45 + child element* £333.33 = £726.78

(*Also for simplicity your child in this example is 13 or older; if they were younger your MIF would be lower depending on their age and thus how many hours you were expected to work.  And if they were born on or after 6th April 2017 the child element for them is lower.)

Because you have a dependant child and don't rent your work allowance is £673
So MIF £1,735.07 - £673 = £1062.07
x 55% = £584.13

UC award
£726.78 - earnings deduction £584.13
= £142.65

It's hard to find definitive answers because people's UC awards and the calculations used will vary WILDLY based on their exact circumstances.  So what's required is an understanding of how things are calculated according to differing circumstances, to then be able to work out answers for a specific situation.


If you would like, we can work out for your situation if you give us the relevant information.  (Although if it is you alone and you do rent, you could just substitute your own maximum UC amount in to the first step of the first calculation I did and that'll give you the answer.)

christhefatcat

Spoonie_Turtle

What a fantastic answer, thank you for taking the time out to make this very clear to me. 👍

christhefatcat

MIF is that amount “TOTAL” before “expenses” are deducted? Or expected total “PROFIT”?

Spoonie_Turtle

It's self-employed earnings, i.e. profit (income minus expenses).