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Universal credit as self-employed (couple))

watt

So currently my wife receives universal credit while I have a permanent job. It's not full, because of my income of course, but she still gets enough to pay the rent.
Now, I am planning to open a small company (self employed) and deliver some services in my area. My simple question is:
If I won't get any income from my second (self) job, will the wife's universal credit be cut or she'll still receive some?

I am confused about the info I've found stating that IF the claimant is self employed that he/she is regarded as automatically earning the minimum income, even though the income might be £0. Or did I get it wrong? I'm afraid that the DWP will calculate our new income as my permanent job income + minimum monthly income (as self employed), even if the profit from my second self-employed job will be null.

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Comments

Adrian_Scope

Hello @watt and welcome to the community.

Self-employment is a bit of a minefield. The good news is for the first 12 months of a new Self-employment, the minimum income floor (MIF) does not apply, as you're usually considered to be in the 'start up period'.

After this period, if you're found to be gainfully self-employed, they will take your assumed income as earnings, typically this is set at 35 x national minimum wage a week. So if your MIF is set at £1000 a month and you only earn £300, they'll still calculate your Universal Credit as if you earned £1000. However the MIF is adjusted based on your work commitments and as you're working for an employer alongside it, they would calculate using your combined earnings (employed and self-employed) or your MIF, depending on which is higher. It also depends on whether they view your business as being gainfully self-employed or not.

I hope that helps a little but please let me know if you have any other questions.

watt

So it's either one income, or the other; whichever is the highest. Not 2 combined, right?
My fear is that the dwp will deduct both, while my self employed job will bring me no income whatsoever

Thanks.

poppy123456

Hi,

As you already have a job then if you're in the "no work requirements group" then the minimum income floor won't apply to you. It will only apply to you if you're in the all work requirements group. See link. https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/how-the-minimum-income-floor-works-if-youre-self-employed/

Any income you receive during your assessment period will affect the amount of UC you can claim because you're claiming as a couple. It's not highest paid income that counts, it doesn't work like that, unfortunately.

watt

poppy123456 said:

Hi,

As you already have a job then if you're in the "no work requirements group" then the minimum income floor won't apply to you. It will only apply to you if you're in the all work requirements group. See link. https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/how-the-minimum-income-floor-works-if-youre-self-employed/

Any income you receive during your assessment period will affect the amount of UC you can claim because you're claiming as a couple. It's not highest paid income that counts, it doesn't work like that, unfortunately.

Thanks, but I'm a little more confused now. Please bear with me.
So this is the scenario: let's say that I work and have a salary of 1000£/month. I'm also self-employed, company older than 1 year, but there is no income whatsoever from this (2nd) job. My question is: how much income does DWP think that I earn per month?
Is it my (1000£) salary from my first job, or 1000£ + minimum income floor (since my second job brings no profit at all)? That's what I'm unclear of.

poppy123456

Earning £1,000 per month from job number 1 is below NMW and this will mean that after 1 year you'll be subject to the MIF for your self employed work, if you receive zero income from this. This means they will assume you're earning NMW and your UC payments will be affected.

If from job number one you receive NMW @35 hours per week then your self employed work won't be subject to MIF after 12 months.

Adrian_Scope

Sorry if my wording confused things @watt. I hope @poppy123456 has managed to clear up any misunderstandings but if you're still not clear please don't hesitate to ask and I'll try my best to help.

BenefitsTrainingCo

watt,

I agree with Poppy that first of all, if you earn at least your conditionality threshold from your employed job, the minimum income floor won't apply to your self-employed income.

If your conditionality is set at 35 hours per week (it may be less than this if your wife gets disability benefits and you get a carer element in universal credit), then you'd need to earn at least 35 x NMW on a monthly equivalent basis to have no work-related requirements - that's just over £1245 a month.

Your claim for UC should be a linked claim with your wife, so you should have had to agree to a claimant commitment. I'd expect that at the moment though, you don't have to do anything. But the commitment should tell you what your conditionality threshold is (expected hours of work if you didn't work as much as you do now), or you could ask your work coach.

Even if you aren't earning enough to have no work-related requirements, I think the minimum income floor wouldn't apply anyway. That's because it only applies if you are in gainful self-employment - if your self-employment isn't your main employment, then I don't think you are in gainful self-employment, and the minimum income floor won't be applied.

From what you're saying then, I think even if you are NOT earning 35 x minimum wage, because your employed work is still your main employment, no minimum income floor will be applied. The reduction to UC will be based on your actual earnings (from both employment and self-employment). You do need to make sure that you tell the DWP about the self-employment you're planning and when it will start. And you should still declare what you make from your self-employment at the end of each assessment period (you can check what this is on your UC journal). Even if it's a loss, you should still tell UC about it.

Sorry it is so complicated, but one good thing is that I don't think you need to worry about the minimum income floor!

Will

watt

BenefitsTrainingCo said:

watt,
The reduction to UC will be based on your actual earnings (from both employment and self-employment).

That's what I needed to know. Thanks.
So in the end, the UC is affected by the ALL the REAL family income, altogether:
(£job1 + £job2 + £job3 + ... + £jobx) / 0.63 = £UC payment
Regardless of the number of working hours. Am I right?

poppy123456

watt said:

That's what I needed to know. Thanks.
So in the end, the UC is affected by the all the REAL income, altogether.

Yes, any income that you receive during your assessment period.

Adrian_Scope

Yes that’s correct @watt.

watt

Alright, guys. Thanks. I guess I'll just go ahead and try my luck as a self-employed. Hopefully we won't need the UC soon

Adrian_Scope

Best of luck @watt!