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Universal credit entitlement

Would the sole director be entitled to universal credits

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I have been approached by a couple of sole directors of limited companies about universal credit.  Unfortunately they have lost key contracts this month.

To be honest I am not sure how universal credit works.  Normally state benefits would be outside the area of Accountancy though I guess we all need to understand how it works inthe current climate.  My clients have contacted the relevant departments and online but seem to be getting no where and getting through to the helpline hasn't been easy for them.  The advisers on the helpline do not seem particularly knowledgeable either

Would it help their chances of getting universal credit increase if we issue their P45 ?  I know there are multiple factors that determine amount of universal credit they receive, does universal credit take into account of their income in 2019-20 tax year or will look at the current situation ?

Maybe they should wait until government is clear on the Job Rentention Scheme for such directors ?

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By Accountant A
15th Jun 2020 20:31

i76rsd

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By JimLittle
28th Mar 2020 19:14

yes silly me sorry

Thanks - will take a look at the websites in detail but main question is can directors of limited companies get universal credit ?

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Replying to Accountant A:
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By JimLittle
28th Mar 2020 19:14

yes silly me sorry

Thanks - will take a look at the websites in detail but main question is can directors of limited companies get universal credit ?

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By Matrix
28th Mar 2020 20:26

I don’t see why they can’t claim but I would expect there is some anti avoidance legislation (there was for tax credits) if there are reserves in the company.

I am not advising on benefits, will put it on the list of options but before we know it we will be filling out forms.

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By Accountant A
15th Jun 2020 20:31

]8y

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By JimLittle
28th Mar 2020 22:26

Thanks for that

Job seekers contribution based is still available ?

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By paul.benny
29th Mar 2020 10:38

Yes, but because the system funnels people into UC, it may be more difficult to access.

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By paul.benny
29th Mar 2020 10:45

As Accountant A says, there are anti-avoidance provisions for company directors seeking to claim welfare benefits - even contribution-based ones. If the director has a controlling interest, s/he is unlikely to be eligible for benefits if the company has resources to pay salary to the director.

If the directors remain in employment - ie no P45 issued, they won't be eligible for any out of work benefits;

Note that UC is household-based - if must be a joint claim with partner; if the partner has income/assets that will be taken into account.

There is a free anonymous benefit calculator at turn2us.org.uk.

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By JimLittle
29th Mar 2020 20:07

UC doesn't look at trading profits of the limited company and bank balance ? Does it look at the current position of the Director and take into account the past year earnings

I suppose for job seekers allowance maybe better to issue P45 there again there is a chance he could be Furloughed

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By legerman
29th Mar 2020 23:29

JimLittle wrote:

UC doesn't look at trading profits of the limited company and bank balance ? Does it look at the current position of the Director and take into account the past year earnings

I suppose for job seekers allowance maybe better to issue P45 there again there is a chance he could be Furloughed

UC takes into account the previous months profit and loss (with some items disallowed). If income has dried up I see no reason not to make a claim, in fact I've hjust helped a Director friend to make a claim. I'll let you know if it was successful

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Replying to legerman:
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By JimLittle
30th Mar 2020 17:05

If sole directors of limited companies can be furloughed then no need to go down the universal credit route.

If not then the director may not get any income at all which seems unfair.

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By Matrix
30th Mar 2020 17:47

Actually it was me who pointed out the anti avoidance rules.

Jim, why don’t you read up on it all and let us know if it is a goer?

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By I'msorryIhaven'taclue
29th Mar 2020 23:56

One of the issues with UC's forerunner working tax credits regime was that the director needed to be employed by the company, which necessitated an employment contract. And because claimants needed to work a set minimum number of hours in order to qualify, the issue of minimum wage rates would arise. A director on a low salary declaring that he or she normally worked the requisite minimum number of hours would place the company open to prosecution for minimum wage rate infringement. Conversely, a higher salary could torpedo the claim (or at least render it much less rewarding).

I guess many directors neither have nor want an employment contract for the above minimum wage reason.

I don't know how that pans out with the new UC. But if an employment contract is still a prerequisite then I suspect that contract's terms regarding normal hours of work and remuneration rate is something that HMRC might seek to check and enforce more robustly under the present circumstances.

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By insolventnl
30th Mar 2020 18:02

I have a few clients who have succombed to Universal Credit being their last resort but with the £16k saving between them and their spouse, they can not claim that also now.

They have taken away the income floor but expect you to use your savings, whereas the other schemes dont look at that - that I think is unfair

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