universal credit

universal credit

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i normally stay well away from universal credit calcs for "sole traders" where possible.

I do have very canny client though who is being forced over  from tax credits and needs to put their first months claim in now under teh new system and they are already somewhat traumatised

Does anyone have any handle on how it works with larger annual expenses loans and private use adjusts 

this client is taxi driver so its mostly straight forward

some larger items though are paid annually eg insurance - they sem to think these can be uploaded monthly is that correct and acceptable as long as there is no double dipping?

is there formal mechanism for private use adjusts eg if motor costs are 10% private use ?

finally how does it work ref capital items aned loans - they have seemed to indicate they include loan repayments - do they ignore acounting principles ref capital allowances disposal proceeds and use some sort of cash basis? client has paid decent deposit on vehicle so it could be monthly loan payments might be less than actual accounting claims.

 Any links to guidance or tips would be appreciated cheers 

whatever happens i will get them to check with the relevant official department check - just nice to ensure we are they not doing anything obviously wrong due to not being experts in the area and 2 that if they need to be proactive to ensure they get full enitlement that they arent obviously missing out on stuff they may be eligible to receive. With all the flaws that tax credit had it was at least based on taxable income not cashflow - hey ho at least taxi driver should have less varinace than dsomeone who earns their money in small peak season.

 

 

 

 

 

 

 

Replies (3)

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By DKB-Sheffield
17th Apr 2024 13:11

Well... IME the first thing to consider is to forget accounting principals!

UC is cash- basis (almost) but ignores certain expenditure!

For the very few clients I have assisted in this - forget 'motoring expenses'. Never found a way to report anything but mileage - even with taxi clients. There seems to be no other mechanism.

Finance interest follows cash-basis rules (£500 per annum) - regardless of whether client prepares 'accruals-basis' ITRs.

Capital expenditure... if it's a car... see above. Anything else, other than relatively minor equipment, I can't recall any experience of that and UC I'm afraid.

Ignore any susbsistence etc. it'll likely be disallowed.

And... remember all 'annual allowances' (mileage, interest etc.) are calculated pro-rata so... interest is £41 pcm, mileage is 45p for the first 833 miles pcm.

The expense items are entered into the system using 'free text' and the headings from previous months don't pre-populate. I'd advise the client to print the first month of entries and use that as the template for future (UC don't like continually changing expense descriptions). Also beware of naming expenses - anything slightly obscure may be an issue.

Finally, there are the caps, and excess rules to consider.

At least your client is a sole trader, and not a s/h director - that's when it all gets ridiculous!

Realistically, it will depend on your client's individual circimstances as to the value of the claim but, if the client has no children, no entitlement to housing etc., they may well find UC is a burden that yields little to no results (unlike TC which at least considered a fuller - annual - picture)!

Good luck!

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Replying to DKB-Sheffield:
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By rmillaree
17th Apr 2024 16:15

Cheers DKB & Rob useful info

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By Rob Swan
17th Apr 2024 14:18

As DKB-Sheffield says, UC have their own rules and bear no relation to HMRC's.
They require submission of allowable expenses online, monthly, seven days prior to monthyl UC payment and they're pretty hot on a timely submission. I've found relevant JobCentre very helpful but not sure if they'll speak to an agent - worth a try.

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