Money taken off first UC payment

NeuroEve

Hi our son has moved from income related ESA support group onto UC. Everything is correct on his statement apart from a deduction of £60. He receives royalty payments and these can fluctuate but never above £350/£400, to zero on some months. We received his notification today for his first payment and they have deducted this months royalties even though I told them he had permitted work on ESA and was registered as a sole trader in case he needed to pay tax. When I asked how I needed to declare royalties they said just put a note in his journal. However I think it should have gone down as self employed. Am I correct in thinking it should not affect his UC unless it was over £411 as he is in LCWRA group and gets housing benefit. I’m sure a contributor called Stickman had similar questions a while back but I can’t find the post. Any help would be grateful.

Kimi87

Did you mean this one?

https://forum.scope.org.uk/discussion/135867/urgent-question-about-conditionality-earnings-threshold-policy

NeuroEve

https://forum.scope.org.uk/discussion/comment/1076429#Comment_1076429

yes that’s the one, I assume our son needs to put this through as self employed earnings.

OverlyAnxious

https://forum.scope.org.uk/discussion/comment/1076431#Comment_1076431

Hi,

I'm not sure whether that thread was about royalties or whether that member was being paid for current music production.

I have learnt more about royalties and UC since I posted in that thread.

As I mentioned on your other thread this week, royalties are classed as unearned income. For this reason, they will be deducted £1 for £1 from UC, so your son won't actually receive any extra money unfortunately.

If he is not actively working in the industry now, then he is not self-employed and not receiving any earned income, which is where the Work Allowance gets applied at £411.

I am sorry if my previous advice was unclear. This is one of the problems with internet forums unfortunately. Old advice remains accessible and readable, even when we have since learnt new knowledge that supersedes it.

NeuroEve

https://forum.scope.org.uk/discussion/comment/1076633#Comment_1076633

Hi he still does about an hour and week which is why he was classed as self employed under ESA. I assumed that the self employed part would go across to uc when I had to take his information to the Job centre to confirm ID. I think it's me who has reported it the incorrect way. I just need to know how to report it as self employed earnings although he is not gaingfully employed but still runs his own music website for streaming his music. He is in LCWRA and citizens advice did say he could earn £411 a month without affecting his UC.

OverlyAnxious

https://forum.scope.org.uk/discussion/comment/1076635#Comment_1076635

The rules are different for UC and ESA so they can't really be compared.

I don't think you've done anything wrong here. Just that the UC system isn't set up for this situation.

Any royalties he receives must be reported as unearned income, and they will be deducted from UC in full.

Any income he receives from a current paid job must be reported as self-employment (earned income), and that won't cause any deductions as long as it is less than £411 per assessment period.

Those two different types of income need to be reported separately. If he is classed as self-employed for current earned income, then he/you will receive a 'To Do' link in the journal at the end of each assessment period to declare the self employed earnings.

NeuroEve

Hi thanks so much for the info. I have spoken to my son and his royalty payments come through from his music that he produces each month. I think I have worded it wrongly from speaking to him. I thought it was from past work but he does 1 hour a week of music as a hobby that he enjoys. I will ring UC tomorrow as I recorded it as advised by the lady at the job centre. Hopefully will get it sorted.

NeuroEve

https://forum.scope.org.uk/discussion/comment/1076672#Comment_1076672

Hi just wanted to say thank you for the info. I now realise its was down to me, when I originally completed his migration I assumed work was full time gainfull employment. He went to college to do a degree but due to his disabilities he could not complete his last year. His explanations are not always clear due to his cummunication difficulties and his also has memory impairment. Music is his only outlet and his hobby for his mental health. He uploads and looks after his streaming on a weekly basis but no longer than an hour and I didn't realise you could declare his sole trader/self employment at the intial stage although, hence the call to UC when I was migrating him over who said to put it in his journal as self employed earnings. I have done a change of circumstamces on the advice of his accountant and will see what happens. I hope he doesn't lose his transitional protection or have his status from LCWRA or his payment stopped as his statement came in Saturday and his payment is next Friday. I feel like I have royally messed up for not understanding the process but having two adults who are disabled is really taking it's toll mentally. This migration for the 2 of them has been toatally overwhelming and although I would not change them for the world I just wish they were in a postition to not have to rely on benefits with disabilities. But thank you so much for taking the time to help me. It's appreciated.

OverlyAnxious

@NeuroEve You're welcome. I understand what you mean now with reporting slightly wrong before. I wouldn't expect any issues from fixing that error now though. Your son won't lose his LCWRA status or Transitional Protection or anything else. As this months UC statement has already been produced, it's probably too late for that one to be amended now, but if he is underpaid by £60 this month, he should receive that back within the next month or two.