UC, Self-Employed and 'transitional protection'.

SpikeyKitten

Hi guys. So I'm self employed. And up until recently have been claiming Working Tax Credits as well. Also Housing Benefit and Council Tax Support, though the latter two have gradually been reducing over the years almost to zero as my business grows and my income rises. That's fine, it worked quite well. 

I've now finally been pushed off these benefits and was asked to make a claim for Universal Credit. After looking into it and reading about the minimum-income floor trap, I almost decided not to bother as it wouldn't be there when I needed it anyway - periods of no work/income, they'd just assume I'd earned regardless.

But then I noticed on the letter it said that I would be eligible for 'transitional protection' which would guarantee I was no worse off for a year. So assumed at the very least I'd get the equivalent of my old WTC award. But no, I went for my first meeting at the job centre this week. The advisor found me 'gainfully self-employed', whatever that means, and put me on a year without minimum income floor applying. All good, but no mention of the 'transitional protection'. And when I later put in my earnings, it came back with a big fat '£0' to be paid from UC. So not 'no worse off' at all. Worse off to the tune of my previous WTC award to be exact.

Anyone know what's going on? I usually earn between £6k-£15k profit from my full-time business. With the general trend upwards.

Thanks

huckster

Raise a query in the claims journal asking why no transitional element has been included.

Sometimes the transitional element is not added in time for the first UC assessment period statement.

SpikeyKitten

huckster said:

Raise a query in the claims journal asking why no transitional element has been included.

Sometimes the transitional element is not added in time for the first UC assessment period statement.

Thank you. I'll do that.

marcia_

SpikeyKitten said:

huckster said:

Raise a query in the claims journal asking why no transitional element has been included.

Sometimes the transitional element is not added in time for the first UC assessment period statement.

Thank you. I'll do that.

 I had to do the same. They missed off a few elements plus TE it was added in a few days after contacting them. 

peteuk

The years transition protection is not always 100% accurate as a statement.  The year only applies to those with capital above £16K.  Your transition period will tapper off in time.

As your self employed then you’ll be given a years start up period, in which the Minimum income floor (MIF) will not be applied to your UC.

Im not 100% but they add everything up and then dedicate your wage (at 55p per £1).  Have a look at your statement and it should show the elements youve been awarded.

poppy12345

To be clear the £16k capital disregard only applies to those migrating from Tax credits and it’s disregarded for 12 months. For everyone else migrating from other benefits it doesn’t apply. 

SpikeyKitten

peteuk said:

The years transition protection is not always 100% accurate as a statement.  The year only applies to those with capital above £16K.  Your transition period will tapper off in time.

As your self employed then you’ll be given a years start up period, in which the Minimum income floor (MIF) will not be applied to your UC.

Im not 100% but they add everything up and then dedicate your wage (at 55p per £1).  Have a look at your statement and it should show the elements youve been awarded.

Thanks,

Yes, I have been given a year's start up period without MIF. But I'm still worse off. As previously I would be receiving my WTC award regardless of my earnings (within reason). Now I get nothing. The migration letter stated that that transitional protection would guarantee that I wouldn't be. I've raised a query on my journal as recommended, but yet to hear back.

SpikeyKitten

So bit of an update.

When I queried this on my journal as recommended. I eventually got a brief message saying "your earnings were too high so TP reduced". 

So is that it? No further explanation forthcoming. And not so much 'reduced', but rather 'removed', as I now get nothing. The migration letter said nothing about an earnings threshold. It mentioned that I would be eligible for TP as long as my circumstances had not changed. Which they hadn't, unless at some juncture unknown my earnings had crept over an (unknown to me) arbitrary threshold.

Is there any point in asking for further clarification? Like, what earning figures are they basing it on? What is/was the threshold for TA to be removed? Etc etc. I'm guessing that the earning figures they are basing that on are from my previous year's accounts or tax return that I took in to my initial meeting to prove I was self-employed. Unless they're basing it on my first month's earnings which were indeed high enough that I was eligible for no UC payment, which I expected. This last month though, I have earned nothing. Does that mean TP will be applied for this month when I declare it? 

It's confusing because 'earnings too high' didn't stop me receiving a Working Tax Credits payment. So if it now stops me getting a TP payment then it's hardly 'Transitional Protection'.

Anyone else self-employed and receive TP and can explain how it works?

kaMelo

There isn't an arbitrary threshold, it's all based upon your individual circumstances. 

The maximum UC award including the transitional element amount is set on migration day but if your earnings increase in the months following migration then the amount of UC you qualify for will decrease accordingly, if you earn enough then it will zero your UC amount. This is calculated in each assessment period.

I supose the main question is, have your earnings inxreased since you migrated?

peteuk

SpikeyKitten said:

It's confusing because 'earnings too high' didn't stop me receiving a Working Tax Credits payment. So if it now stops me getting a TP payment then it's hardly 'Transitional Protection'.

Anyone else self-employed and receive TP and can explain how it works?

Yes it did, only it was paid and then paid back.  TC took your annual wage, calculated the payment and ten split that amount by 13.  At the end of the year it took your actual yearly income and recalculated it   At that point any overpayment was a debt,

UC works on a monthly assessment period and so, calculates your payment on your income that assessment. 

SpikeyKitten

Ahh ok, I think it's starting to make sense.

Well I migrated a month ago, they asked for my earnings for the month previous, which were high enough that I received nothing in UC. Fair enough. But the month since I migrated I've earned nothing. Zero. So I suppose I'll wait and see what happens next time. 

I only really 'signed on' because I believed I was entitled to Transitional Protection. (equivalent to my old WTC award). I understand what you're saying about my old WTC being paid 'up front' as it were, but I was never asked to pay any back, so can't have had 'earnings too high' previously. So whilst the 'monthly assessment' aspect of UC is starting to make sense, I'm still losing out I think.