Universal Credit as a Sole Trader

HolyMoly123

Actively planning a move from a very secure and well paid full-time job to become a sole trader.  As part of my research before taking the plunge, I understand that I should be able to apply for UC if things don't go entirely to plan and I need some temporary support (single parent, two small children).

I understand that UC states that you must have no more than £6k in savings, which I fully appreciate. As a sole trader though, I believe that in year 1 I would save some earnings to go towards income tax and NI to pay after self assessment at the end of the tax year (correct me if I'm wrong). However, I do still want to have a savings buffer separate from my tax pot. How is this taken into account by HMRC and reconciled? Any advice appreciated, thanks.

Spoonie_Turtle

You can have up to £16,000 and be eligible for UC, £6,000 is the threshold where they start making deductions for savings.  (£4.35 for every £250 or part thereof above £6k.)

Others here are much better versed with self-employment and UC, but you can have separate capital in the business as long it's wholly or mainly for running the business - which capital earmarked for tax and NI, essential expenses, would certainly be.

ADM chapter H2
"Business assets
Assets which are used wholly or mainly for the purposes of a trade, profession or vocation which the person is carrying on, are disregarded indefinitely"
https://assets.publishing.service.gov.uk/media/6798cc97cbd1e3a508a22d5d/admh2.pdf