Universal Credit and self-employment
The government has published a report, called ‘Universal Credit: supporting self-employment’ which considers the issues faced by self-employed claimants.
Universal Credit is a monthly payment to help with your living costs. You may be able to get it if you’re on a low income or out of work – but self-employed people may also be eligible from time to time.
The report considers the impact of the Monthly Income Floor (MIF) earnings requirement. To be eligible for Universal Credit (UC) claimants must earn the MIF. However, the MIF assumes self-employed claimants earn a regular income at least equal to the National Minimum Wage, and makes no provision for those with income and expenditure that vary from month to month.
Many of our clients here at The Hollies, an all-service bookkeepers in Shropshire earn drastically different amounts from months to month and schemes such as this can pass them by if they do not know if a)they are eligible or b)keeping proper tracks of their books, which affect their earnings.
The 41 page report states that the MIF has been designed with monthly paid employed individuals in mind rather than the self-employed who may have more volatile earnings.
It also considers the current system which allows self-employed individuals to be exempt from meeting the MIF for the first 12 months of self-employment and whether this is sufficient. The report urges the Government to extend the exemption period.
Everyone claiming Universal Credit needs to report their self-employed earnings at the end of each monthly assessment period. This includes company directors, even those paying themselves by PAYE.
You’ll need to report payments into and out of your business in the assessment period. This includes:
- total amount your business received
- how much your business spent on different types of expenses, such as travel costs, stock, equipment and tools, clothing and office costs
- how much tax and National Insurance you paid
- any money you paid into a pension
More information can be found here https://www.gov.uk/self-employment-and-universal-credit
If you want to talk to us about this, or any aspect of your self-assessment, don’t hesitate to call us on 01743 790086.