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Universal Credit - Do i deduct drawings?

Do I deduct drawings from my overall income?

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Hi,

I was made redundant last year due to Covid, and decided to go freelance as a designer (sole trader). I also thought it would be wise to register for Universal Credit. What I dont know is when submitting my Universal Credit, it asks for income - catagorised as ALL income for the business as a whole and then asks for deductions. Until now I have assumed that my actual drawings are irrelevnat due to the wording on the website, but curiousity has been eating away at me - do I list my drawings as a deduction out of the main income?

For example;
Total Recipts/Income for Month: £2,000
Total Expenses (ex. actual drawings): £200
Amount UC worked out on: £1800

OR - should I be deducting my actual drawings from the income amount - as I am not actually taking all the money that comes in, as per example below;

Total Income: £2,000
Total Expenses: £200
Drawings: £1000
Amount UC worked out on: £2,000 - (£200+£1000) = £800

I just want to ensure I am claiming all that I am entitled to, as things are getting tough at the moment (as they are for many), and the difference in assistance I get in the above scenarios is huge and would have a much needed impact on our monthly household income.

Thank you

Replies (3)

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By jonharris999
07th Jan 2021 12:50

Hi Miles. In essence, no - your drawings are not expenses.

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By SteveHa
07th Jan 2021 12:59

As a sole trader, there is no legal separation between you as an individual and the business. Whatever profits the business makes, you make, regardless of what you actually draw from the business.

So I concur with John, you take no account of drawings.

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By milesfreelance
07th Jan 2021 13:13

That’s great - thank you for confirming, a relief to know that I have been doing it correctly up until now at least :)

Best regards

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