Universal Credit: Get the details right
Victoria Todd gives a brief outline of how Universal Credit works particularly for self-employed people who need to make a claim.
You might also be interested in
Victoria is a chartered tax adviser who is currently Head of the Low Incomes Tax Reform Group, an initiative of the CIOT to give a voice to the unrepresented. Victoria has worked for LITRG for nearly 15 years following a number of years in various welfare rights roles. She was appointed to the Social Security Advisory Committee in 2016.
Replies (7)
Please login or register to join the discussion.
Thank you Victoria, handy article. I note certain directors are treated for UC purposes as self-employed and so this presumably means that such UC claimants need to be reporting their company profits (on a cash basis) each month, rather than reporting salaries/dividends actually drawn. Does this really mean a company director could be drawing a salary, but so long as overall the company is making a loss before deducting the cost of this salary then the income for UC purposes is nil?
Just looking into this myself. The link to revenuebenefits.org is useful but I'd say it's currently much more of a grey area than reporting profits on a cash-basis. In my opinion, if say husband and wife directors are drawing most profits as salary/dividends and leaving reasonable working capital in the company - I don't think those amounts of retained profits would be reportable under UC.
But, I'm just thinking out loud.
Thanks Victoria. I've been dealing with Tax Credits for years but have very few clients on UC so haven't got involved with them. Your article is really helpful. Can you clarify whether business assets are part of the £6000 and if so is that only cash (because income is cash based) or also debtors and creditors?
Last time I looked into this it was the share capital at cost that was treated as Capital and which if total capital > £6,000 will give rise to "Tariff Income".