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  • FIRST POST
    BBBNH
    Self employment & Universal Credit (yet again)
    • #1
    • 31st Jan 13, 8:26 PM
    Self employment & Universal Credit (yet again) 31st Jan 13 at 8:26 PM
    Apologies if this has been asked a million times, i can't find nothing relating directly to it.

    Ok, those who are self employed need to be earning minimum wage in order to qualify for UC? Is that before or after expenses? With regards to the current rules, under the tax credit system, are you supposed to earn minimum wage before or after expenses?

    What happens to parents who are together and also lone parents once their child starts school? How many hours are they supposed to work (both those that are employed & self employed?)

    I just want to be prepared & i also want to inform some of my friends who are totally oblivious.
Page 1
    • BigAunty
    • By BigAunty 31st Jan 13, 8:41 PM
    • 7,941 Posts
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    BigAunty
    • #2
    • 31st Jan 13, 8:41 PM
    • #2
    • 31st Jan 13, 8:41 PM
    Under the current tax credit system, there are no rules that require the working tax credit claimant to have a profit related to the NMW - WTC is based on hours worked, not income. A claimant can currently get WTC and all other associated benefits based on their income, however low it is.

    I can't definatively answer for the NMW under UC but I expect that this is net profit, after expenses and tax. Turnover is a pointless way of measuring business success - someone who turns over 100,000k and makes only 1% net profit is a worse business person than another who turns over 20k and manages a 10% profit. A claimant with a big turnover but tiny profit is still going to be benefit dependent - the whole point of UC is to stop the ceaseless rise in low or no profit businesses that people set up to escape JSA or enjoy their rent and council tax paid indefinately....
  • BBBNH
    • #3
    • 31st Jan 13, 10:29 PM
    • #3
    • 31st Jan 13, 10:29 PM
    Under the current tax credit system, there are no rules that require the working tax credit claimant to have a profit related to the NMW - WTC is based on hours worked, not income. A claimant can currently get WTC and all other associated benefits based on their income, however low it is.

    I can't definatively answer for the NMW under UC but I expect that this is net profit, after expenses and tax. Turnover is a pointless way of measuring business success - someone who turns over 100,000k and makes only 1% net profit is a worse business person than another who turns over 20k and manages a 10% profit. A claimant with a big turnover but tiny profit is still going to be benefit dependent - the whole point of UC is to stop the ceaseless rise in low or no profit businesses that people set up to escape JSA or enjoy their rent and council tax paid indefinately....
    Originally posted by BigAunty
    Thank you.

    So as a lone parent working 16 hours self employed, I need to be clearing NMW every week after my expenses in order to qualify?

    Any idea how many hours lone parents need to increase their hours to once their child is of school age under UC?
    • HappyMJ
    • By HappyMJ 31st Jan 13, 10:38 PM
    • 20,595 Posts
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    HappyMJ
    • #4
    • 31st Jan 13, 10:38 PM
    • #4
    • 31st Jan 13, 10:38 PM
    Thank you.

    So as a lone parent working 16 hours self employed, I need to be clearing NMW every week after my expenses in order to qualify?

    Any idea how many hours lone parents need to increase their hours to once their child is of school age under UC?
    Originally posted by BBBNH
    Yes...you will still qualify anyway even if you don't earn enough but you will be expected to look for further work to increase your gross profit. You will never be subject to work trials or anything like that.

    Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money.
  • PermaHeretic
    • #5
    • 24th Apr 13, 1:11 PM
    • #5
    • 24th Apr 13, 1:11 PM
    I hope to have time to read through all your posts properly at some pont, but in the meantime I thought you might be interested in my blog post about how the Universal Credit rules will affect the self-employed. I am a new user and they won't allow me to post links, but do a Google search for Permaculture House in Totnes and you'll find it. Also search Facebook for Universal Credit and the Self Employed.
    • rogerblack
    • By rogerblack 24th Apr 13, 1:48 PM
    • 9,273 Posts
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    rogerblack
    • #6
    • 24th Apr 13, 1:48 PM
    • #6
    • 24th Apr 13, 1:48 PM
    I hope to have time to read through all your posts properly at some pont, but in the meantime I thought you might be interested in my blog post about how the Universal Credit rules will affect the self-employed. I am a new user and they won't allow me to post links, but do a Google search for Permaculture House in Totnes and you'll find it. Also search Facebook for Universal Credit and the Self Employed.
    Originally posted by PermaHeretic
    Some of the above (at http://www.permaculturehouseintotnes.co.uk/ ) is misleading - as there are provisions for startup buisnesses, where the requirement for earnings will not apply, and the requirement for childcare can limit work hours, similarly with disability.
    In some cases the treatment of the disabled with small buisnesses - especially single people with no housing costs - is lots more generous.

    But it's a good general outline, and recommended.
    • bigjl
    • By bigjl 24th Apr 13, 2:27 PM
    • 6,261 Posts
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    bigjl
    • #7
    • 24th Apr 13, 2:27 PM
    • #7
    • 24th Apr 13, 2:27 PM
    My wife is self employed.

    And after struggling to find proper employment I phoned up about ESA.

    The person I spoke to says your partner needs to be working at least 16 and up to 24hours a week, not 24 as that means a reduction in benefits even if the mariner is earning 1 an hour!

    It didn't make sense but then again when does the benefit system ever do that unless you are the mind of claimant that knows all the ins and outs and treats claiming as a career.
    • sammyjammy
    • By sammyjammy 24th Apr 13, 3:06 PM
    • 4,538 Posts
    • 4,971 Thanks
    sammyjammy
    • #8
    • 24th Apr 13, 3:06 PM
    • #8
    • 24th Apr 13, 3:06 PM
    My wife is self employed.

    And after struggling to find proper employment I phoned up about ESA.

    The person I spoke to says your partner needs to be working at least 16 and up to 24hours a week, not 24 as that means a reduction in benefits even if the mariner is earning 1 an hour!

    It didn't make sense but then again when does the benefit system ever do that unless you are the mind of claimant that knows all the ins and outs and treats claiming as a career.
    Originally posted by bigjl
    This thread is about Universal Credit. Anyone you speak to in DWP on the frontline is likely to know as much as the average man on the street at present, except in the Pathfinder area.
    "You've been reading SOS when it's just your clock reading 5:05 "
    • WantToBeSE
    • By WantToBeSE 24th Apr 13, 3:17 PM
    • 6,778 Posts
    • 30,548 Thanks
    WantToBeSE
    • #9
    • 24th Apr 13, 3:17 PM
    • #9
    • 24th Apr 13, 3:17 PM
    Apologies if this has been asked a million times, i can't find nothing relating directly to it.

    Ok, those who are self employed need to be earning minimum wage in order to qualify for UC? Is that before or after expenses? With regards to the current rules, under the tax credit system, are you supposed to earn minimum wage before or after expenses?

    What happens to parents who are together and also lone parents once their child starts school? How many hours are they supposed to work (both those that are employed & self employed?)

    I just want to be prepared & i also want to inform some of my friends who are totally oblivious.
    Originally posted by BBBNH
    I have heard from other threads on here, that under UC rules, a lone parent must work full time (so i imagine 38 hours) once their child is at full time school. Not sure about parents who are part of a couple though.
    3/6 month emergency fund challenge #20
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    • sammyjammy
    • By sammyjammy 24th Apr 13, 4:09 PM
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    sammyjammy
    I have heard from other threads on here, that under UC rules, a lone parent must work full time (so i imagine 38 hours) once their child is at full time school. Not sure about parents who are part of a couple though.
    Originally posted by WantToBeSE
    Well if you've read it it's not true, neither is full time for UC rules 38 hours, its 35. Single parents with children between 5-13 will have limited conditionality, that being school hours only.
    "You've been reading SOS when it's just your clock reading 5:05 "
    • Orville
    • By Orville 24th Apr 13, 4:31 PM
    • 1,742 Posts
    • 1,005 Thanks
    Orville
    Well if you've read it it's not true, neither is full time for UC rules 38 hours, its 35. Single parents with children between 5-13 will have limited conditionality, that being school hours only.
    Originally posted by sammyjammy

    Does that mean you actually have to find work within school hours or say if you do early mornings or evenings as long as you work the equivalent hours your fine..?

    My job is early mornings but sometimes i may stay on till well any time, 10am / 11am depending on the needs of the business..?. I also own my own website that i tend to look after while nipper is at school and after. I am down as self employed for that too at 12 hrs a week...
    • dktreesea
    • By dktreesea 24th Apr 13, 5:27 PM
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    • 8,674 Thanks
    dktreesea
    Thank you.

    So as a lone parent working 16 hours self employed, I need to be clearing NMW every week after my expenses in order to qualify?

    Any idea how many hours lone parents need to increase their hours to once their child is of school age under UC?
    Originally posted by BBBNH
    No, that's not right. You just earn whatever you earn. You qualify provided you work the required hours, or if you earn over the earnings threshold, for your particular circumstances. But there are deeming rules. So say your work requirement as a sole parent is 24 hours a week. Then you would need to be working your business for at least 24 hours a week to be "gainfully self employed".

    The next step is to calculate what you would earn if you were earning (i.e. had net profit) the equivalent of the NMW for the number of hours you are required to work. Say that works out to 148 a week or thereabouts (i.e. 24 hours at the NMW. It would be a bit less, because things like income tax and national insurance contributions are deducted when they calculate the earnings threshold). Your UC is then based on the higher of your actual net profit or the deemed income, even if your actual profit is not as high as the deemed income.

    So, for carers of a child between 5 and 13, the number of hours you are required to work is restricted to school hours less an amount for travelling:

    "235. Hours of work will be limited where:

    the claimant is the responsible carer (including adoptive parents, relatives who are the legal carer of a child and parents of a child where the claimant is not the responsible carer but has caring responsibilities for the child) for a child aged 5 to 13 (hours usually limited to school hours with an allowance for travelling time);" (Universal Credit Regulations, 2012)

    Say, as a self employed person, you work 16 hours a week, but earn a net profit of 300 a week. You wouldn't be subject to any work related requirements even though you are not working the full school hours less travelling time (just say this works out to 24 hours a week; the regulations are vague on this) because you are earning over the earnings threshold for your required hours. The NMW for 24 hours is 148 a week. Since you earn well over that, it doesn't matter how many hours you work.

    If on the other hand, the government accepts you are gainfully self employed (so no requirement to look for work) you work at least the hours you are required to work given your child caring circumstances, but earn less than the earnings threshold, e.g. a net profit of only 40 a week, the government will calculate the UC due to you based on the deemed income of 148 a week, not on your actual profits.

    This is why some self employed people are closing their businesses and moving onto JSA, because if they don't the drop in their incomes is going to be savage.

    For example, a family of four with two school age children and both parents full time self employed but with an income from self employment of 2k per annum wouldn't reach the applicable amount for calculation of housing benefit, so would receive the full award or their actual rent, whichever is lower, and the full award for council tax benefit, plus the maximum WTC and CTC plus CB. In some areas of Britain, and no, not just in London, that could come to over 20k per annum, tax free.

    After UC comes in, say the minumum floor for the couple, is FT NMW, (i.e. children are both over 13) so 35 hours per week at the NMW, their deemed income, even after taking income tax and NI contributions off, will be around 10.5k each). That's enough to reduce their benefits by over 13k a year (i.e clawback of the benefit of 65 percent of the income deemed to be earned).
    • dktreesea
    • By dktreesea 24th Apr 13, 5:30 PM
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    dktreesea
    I have heard from other threads on here, that under UC rules, a lone parent must work full time (so i imagine 38 hours) once their child is at full time school. Not sure about parents who are part of a couple though.
    Originally posted by WantToBeSE
    35 hours a week, but for UC this only applies to lone parents with children over 13.
    • bigjl
    • By bigjl 24th Apr 13, 6:40 PM
    • 6,261 Posts
    • 2,655 Thanks
    bigjl
    This thread is about Universal Credit. Anyone you speak to in DWP on the frontline is likely to know as much as the average man on the street at present, except in the Pathfinder area.
    Originally posted by sammyjammy
    Yes, I was aware the thread was about EC, but it is likely the limits for hours worked in self employment will be similar for different benefits surely?
    • dktreesea
    • By dktreesea 24th Apr 13, 7:07 PM
    • 5,552 Posts
    • 8,674 Thanks
    dktreesea
    Yes, I was aware the thread was about EC, but it is likely the limits for hours worked in self employment will be similar for different benefits surely?
    Originally posted by bigjl
    Not really because people who aren't self employed will be subject to conditionality. So, if your child is over 13, say, and you are required to work 35 hours a week but are unemployed, the regulations state that you should therefore be looking for work for the full 35 hours. And even if you have skills, those regulations also say that after a certain time, if you don't get a job matching your skills, you have to be prepared to take any job, even a minimum wage one.

    Self employed people are gainfully employed, so not subject to any conditionality. The quid pro quo is if you want to run your business (and meet the requirements for that business, i.e. it has to be genuine, you have to actually be working in it, running it with the expectation of a profit etc in order for the government to classify you as "gainfully self employed") and only earn 1 a year net profit from it, fair enough, but the taxpayer is only going to cough up support for you to the extent they would have to if you were earning the NMW for your required hours of work.
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