MIF LTD company director earnings

warkadang

Hi everyone,

I’m trying to get clarity on how the Minimum Income Floor (MIF) is applied for directors of a limited company (who are considered gainfully self employed) under Universal Credit.

Here’s an example:

• Company income: £3,000
• Business expenses: £1,000
• Director’s PAYE salary: £1,500
• Profit left in company: £500
• MIF: £1,600

Interpretation 1 (the way I currently understand it):

• Salary (£1,500) is treated as employed earnings (via RTI).
• Profit is only £500, but because it’s less than MIF, UC replaces it with £1,600.
• Total assessed earnings = £1,500 + £1,600 = £3,100.
  This feels like the MIF is being added on top of salary, which means UC counts more than the business actually generated.

Interpretation 2 (what some people on forums suggest):

• First total earning is calculated - Salary and profit are combined (£1,500 + £500 = £2,000).
• UC then applies the MIF to the combined figure if it’s lower than £1,600.
• So in this case, combined earnings (£2,000) > MIF (£1,600), meaning UC would just use £2,000.
  This would stop the “double counting” feeling.

I’d really like to hear which of these two approaches have you seen UC actually apply?

Thanks a lot in advance!

tacpot12

It's the second one. See here: Claiming Universal Credit when you are self-employed - GOV.UK

This confirms that the income that UC is interested in is the total income to the business less, allowable business expenses. They don't care if you take a salary or dividends.

warkadang

Thanks a lot for the explanation ! @tacpot12