MIF LTD company director earnings

waklam
waklam Online Community Member Posts: 1 Listener
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Hi everyone,

I’m trying to get clarity on how the Minimum Income Floor (MIF) is applied for directors of a limited company (who are considered gainfully self employed) under Universal Credit.

Here’s an example:

  • Company income: £3,000
  • Business expenses: £1,000
  • Director’s PAYE salary: £1,500
  • Profit left in company: £500
  • MIF: £1,600

Interpretation 1 (the way I currently understand it):

  • Salary (£1,500) is treated as employed earnings (via RTI).
  • Profit is only £500, but because it’s less than MIF, UC replaces it with £1,600.
  • Total assessed earnings = £1,500 + £1,600 = £3,100.
    This feels like the MIF is being added on top of salary, which means UC counts more than the business actually generated.

Interpretation 2 (what some people on forums suggest):

  • First total earning is calculated - Salary and profit are combined (£1,500 + £500 = £2,000).
  • UC then applies the MIF to the combined figure if it’s lower than £1,600.
  • So in this case, combined earnings (£2,000) > MIF (£1,600), meaning UC would just use £2,000.
    This would stop the “double counting” feeling.

I’d really like to hear which of these two approaches have you seen UC actually apply?

Thanks a lot in advance!

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