Work expenses on UC

Ms_Wheels

I have been on ESA (support group) for many year and currently working under the permitted work scheme. I've recently received the invite to migrate from ESA to UC and I'm trying to understand how my earnings and expenses will be processed on UC especially expenses that I pay annually.   

The job centre were not able to advise and signposted me to call UC. UC are not able to offer advice on how my earnings and expenses will be calculated until my migration to UC has been completed and I have received my first UC payment. I have attempted to find the answer using DWP ADM though I am finding them quite difficult to understand! 

The reason I'm trying to understand prior to UC claim being processed/first payment received, is because I have 2 annual expenses due now, of approx £310 and £120 - these cover registrations that is essential to have to be able to carry out my work. The £310 expense has the option to be paid in 4 instalments (at a slightly increased cost). 

From what I have read, it appears on UC expenses are deducted from earnings in the month the expense was incurred. This would be OK for my weekly and monthly expenses (phone contract etc) but would be problematic for my annual expenses (insurance, registration etc).  If I cannot establish if UC will be able to average this expense over 12 months, I think it might be wise to pay it in the 4 instalments so that at least it can be deducted from 4 UC payment periods. 

Does anyone know if UC can average out annual expenses? 

If you could signpost me to easy to understand literature/guidance, that would also be helpful.  

Further info / context

If it helps, I've provided some background info as my work situation is slightly complex.

I am employed and paid via PAYE. DWP have accepted this permitted work, however they have chosen to treat me as self-employed (I am unsure if UC decision makers will come to the same conclusion). I believe the ESA team decided to treat me as self-employed as I am on a causal contract where I chose my own hours (typically I manage between 0-6 hours/week, occasionally up to 9 hours/week) and I have work related expenses that are not paid for by my employer. They have information about my employment, can see earnings via HMRC and payslips I provide, have evidence of my expenses and a letter from employer confirming the expenses are paid reimbursed by the employer.

I have expenses that are paid weekly, monthly and annually. On ESA PW my total expenses for the year were added together and 1/12th of the total is deducted from each month’s earnings.

I know permitted work does not exist on UC. The job centre have been able to advise that I will not be expected to look for work due to my disability however I can continue with my current work. I understand I will have a work allowance of £411 after which my earnings will reduce the amount of UC I receive. This work allowance is lower than the permitted work allowance. As the work allowance is lower than permitted work, I do expect some months to have a reduction in UC. However, if annual expenses are not averaged across the 12 months, the months I pay out these expenses I will make a loss. 

Thank you for reading. Any feedback and guidance would be gratefully received. 

itsthelittlethings

All the ESA stuff is probably irrelevant, I don’t know the answer to your question as I have not much idea about self employment and UC.

sgthammer

DWP's logic in considering you self-employed makes sense even if being on PAYE makes it seem counterintuitive. And it gives you the opportunity to report variations in your monthly income.

For UC, work expenses can be deducted (subject to usual disclaimers about what's reasonable etc) in the Assessment Period when they're incurred. If that means you make a loss, it's assessed as £0 income for determining that payment, but the loss is then carried forward and offset against your earnings for the next AP. 

So initially it looks as if your expenses are being dismissed, but then it works out okay once you earn more than you've spent. There's no averaging as such.

Ms_Wheels

Thank you both.

sgthammer - thank you for explaining that it's possible to carry forward loss. 

To me the UC seems a more confusing approach than what I was used to on ESA, but that may just be because I'm still trying to get my head around how UC works. 

rosewalk

I would check with Citizens Advice or similar. I don't think that you can carry over a loss if you are PAYE I think this only applies if you are self employment but I could be wrong. 

huckster

UC will not treat the work as self employed, in the same way as ESA, if you are correctly stating a decision made under ESA. 

When you claim UC, you will need to record that you are employed. UC will receive the earnings information that your employees report to HMRC.

UC will not be interested in the expenses you mention. It is not possible to deduct these expenses from employed earnings. And you mention that your employees reimburse you for these expenses anyway.