Housing Benefits while running a company

Housing Benefits while running a company

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I have a friend in Dundee who has started his own limited company and he has been on housing benefit since last year. He is now wondering whether he will continue receiving housing benefit and what are the legal requirements for housing benefit.

He limited company is currently making a loss and he is not even drawing any salary at the moment so he is effecively working for free.

What are the requirements for housing benefit? Can he only work for certain number of hours a week to qualify for housing benefit? Can we work the extra hours for free (i.e. not receiving a salary)?

Any guidance would be highly appreciated

Replies (21)

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By SXGuy
02nd Apr 2019 15:10

I'd image. And it's not my area so don't quote me, but benefits are dependant on taxable income and drawings. Not what a company turns over or indeed the profits.

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By paul.benny
02nd Apr 2019 15:33

By starting his own company, your friend has a change of circumstances - and should have notified the local authority (who pay the housing benefit) and the DWP (if there are any other benefits such as Jobseekers' Allowance). This may result in him having to move from legacy benefits to Universal Credit(UC). This combines a number of low-income benefits, including housing benefit.

UC is great in theory but has a lot of failings in practice. One of those is that it is poor at dealing with self-employment. To calculated benefit entitlement, the DWP will assume that your friend is working 40 hours a week at minimum wage.

Claiming benefits can be tricky for all but the simplest circumstances. It's a minefield for the self-employed. There are various benefit calculators such as Turn2us which can provide a guide.

I recommend getting in touch with Citizens Advice who can take into account your full circumstances.

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Replying to paul.benny:
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By Dougscott
02nd Apr 2019 16:20

I agree you need to inform the DWP but don't let them push you onto UC whatever you do. I am reliably informed that the DWP will attempt to push people onto UC but it is not compulsory if you are already claiming. If you have an existing claim do not stop it, just advise of the change in circumstances, however I would always go to CAB first for proper advice before talking to the DWP.

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By shan1234
02nd Apr 2019 15:50

Thank you everyone for your reply. I have advised him accordingly. He asks if anyone has been in a similar situation. How does it work when he is working 40 hours but not drawing any salary? Does that count as working

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Replying to shan1234:
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By paul.benny
02nd Apr 2019 16:08

In UC world, self-employed are treated as working 40 hours a week at minimum wage, however much or little they work. To receive the out-of-work components, you must be seeking work or carrying out work-related activities - and you can't do those if you're working 40 hours a week.

(There is a logic to the rules - it's about stopping people exploiting benefits by deferring income. It just doesn't work for those with variable or uncertain income from self-employment, nor those who are starting up)

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Replying to paul.benny:
By Duggimon
02nd Apr 2019 17:12

Just as well he's not self employed then.

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Replying to Duggimon:
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By legerman
25th Oct 2020 22:18

DELETED: I hadn't realised I was replying to an old post and I've only re-iterated what I've already said.

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By shan1234
02nd Apr 2019 17:24

That's an interesting point. Would some working in own limited company regarded as self employed?

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Replying to shan1234:
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By Cheshire
02nd Apr 2019 18:36

no

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Replying to Cheshire:
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By legerman
02nd Apr 2019 23:08

Quote:

no

Yes under Universal Credit Rules, but not under Housing Benefit rules.

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Replying to legerman:
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By Cheshire
03rd Apr 2019 07:57

Just another example of the states ineptitude or insultingly dumbing down terminology for the claimants.

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Replying to Cheshire:
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By legerman
03rd Apr 2019 13:06

Quote:

Just another example of the states ineptitude or insultingly dumbing down terminology for the claimants.

I totally agree with you.

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By shan1234
02nd Apr 2019 19:43

Thanks. If anyone has any experience of how working for own limited company and not drawing a salary would affect benefits, that would be great.

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Replying to shan1234:
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By legerman
02nd Apr 2019 23:06

Quote:

Thanks. If anyone has any experience of how working for own limited company and not drawing a salary would affect benefits, that would be great.

If he's already on HB, and remains on it, his income is based on what he receives as wages and declares as profit. I have a client on tax credits/HB and every year he has to send in his accounts. If your client is not taking a wage and not making a profit his income will be nil and he will receive HB. Ensure your client is not subject to NMW/NLW

As others have said, when it changes to UC different rules
apply and the director is classed as a self employed person. There may be 6 months transitional relief but after that he will be deemed to be earning the minimum wage. (It's actually 35 hours, not that it will really help) Also there are certain expenses not allowed, even if they are legitimate expenses. He will also need to submit basic accounts once a month, based on income and expenditure in that period.

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Replying to legerman:
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By London199
24th Oct 2020 23:12

I was looking at this earlier today,your not self employed on uc if your a director and employ 1 person ie your spouse for a few hrs a week

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Replying to London199:
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By legerman
25th Oct 2020 22:34

Quote:

I was looking at this earlier today,your not self employed on uc if your a director and employ 1 person ie your spouse for a few hrs a week

Can you provide a source please?

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Replying to legerman:
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By London199
26th Oct 2020 10:22

You are just try using one o the benefit calculation

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Replying to London199:
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By User deleted
26th Oct 2020 10:29

Quote:

You are just try using one o the benefit calculation

Can you not string a sentence together man?

Why are you not answering Legerman's query for a source?

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Replying to London199:
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By User deleted
26th Oct 2020 10:28

Quote:

I was looking at this earlier today,your not self employed on uc if your a director and employ 1 person ie your spouse for a few hrs a week

You're (ie you are) not your.

So, you do not pay yourself enough from the Ltd co so that you need to claim UC. But the Limited co can afford to pay your wife. Tantamount to fraud!

What work does your wife do for her wage. Do you pay her minimum wage. Is your wife's wage deductible as an expenses gven you have just made up a role for her to bypass the system. What will HMRC look at when they come to inspect you?

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By ruth.julian
03rd Apr 2019 12:45

Slightly sideways, but a friend was made redundant as a hairdresser. She decided to go self employed. She was told that handing out fliers and business cards to drum up business counted as work, even though at that point she had no customers, and those hours counted to the weekly maximum work she could do on Job Seekers' Allowance.

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Replying to ruth.julian:
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By Bobbo
03rd Apr 2019 13:41

Are you suggesting it's unfair those hours were counted are merely stating it as an example?

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