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I think I’ve messed up

ilikepinkthings

Sorry if this is in the wrong section.

I think I’ve got myself into a bit of a mess. I’m currently on legacy benefits and have been for many years as I’m a carer for my son who is disabled. My son has very complex needs and to give myself something to do for myself, I started an Etsy store. Initially this didn’t bring in anything for a few months.

I’m now at the point where it’s starting to earn more (not much, £150ish is due to be paid for last month). So I know I need to cancel my current benefits and switch to UC. My first payment from Etsy was in January and that was only 19p then my next payment was £4. Until this month I’ve made very little and just enough to cover materials. I’m now scared what’s going to happen when I tell them, I’ve never made more than £90 a month before this month, I know that’s not the point and I should have told them, I just thought since it was a hobby and just covering materials it was fine.

I just don’t know what to do as I’ve been on legacy benefits for so long. Do I just put in an application for UC and that will automatically cancel income support etc or will I need to make an appointment to see someone? I’m so stressed that I’m going to be in some sort of trouble. I didn’t really think I’d ever make much. I’ve printed out all my statements from Etsy to show them. When I do apply for UC I don’t even know if I’m supposed to class myself as self employed.

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Comments

poppy123456

Which benefits exactly do you currently claim? I can't give any advice without knowing all the information.

ilikepinkthings

I currently claim;

Income Support
Housing Benefit
Child Tax Credits
Child Benefit
Carers Allowance

From the research I've done, my understanding is I haven't earned more than would be allowed but it's just I haven't told them yet. I'm due to get £150 next week from Etsy which is for the month of August.

Thanks.

poppy123456

When claiming IS you're allowed to earn up to £20/week, anything more than this will reduce your IS £1 for £1.

For carers allowance it's £132/week.

You will need to contact your local Authority about housing benefit because of your earnings. I don't know how this will affect that. Tax credits is based on earnings for the previous tax year unless there's a £2,500 difference, which there isn't here.

If you claim UC then you'll have the work allowance of £344/month, which means you can earn that much each month without your UC being affected. Anything over this will reduce your UC by 55%.

If you claim UC your tax credits will end. IS and HB will continue for 2 weeks and then stop. Rent will then be covered in with your maximum UC entitlement.

As a carer you won't have any work commiments. You will be expected to attend your local Job centre when you first claim.

As self employed you will need to report earnings and expenses on your journal on the last day of your assessment period.

ilikepinkthings

Thank you, that's very helpful. So it seems there might be a small overpayment of IS. But I'll need to double check. I'll definitely need to end my IS right away.

Is the best way forward just to put in a claim for UC and that will automatically end everything else? That's the bit I'm confused about, I don't know how to proceed. I don't know if I need to go in and seem them and "come clean" then claim UC or put in a UC claim first and then explain.

iza

Hi @ilikepinkthings, perhaps it would be easier if you simply donate straight away some money toward charitable organisation? And the money which will reach your account will be less by the sum of donation.
I think with Etsy (if I am not wrong) you do not have to withdraw money straight away, you can leave them there for some time. (not sure )
At the moment you don't know if next month will bring you the same profit again.
Next month can be different and can bring you only few ponds back again. You are simply not able at the moment to predict what next month trading on Etsy will be.

poppy123456

iza said:

Hi @ilikepinkthings, perhaps it would be easier if you simply donate straight away some money toward charitable organisation? And the money which will reach your account will be less by the sum of donation.

That's not the best advice, sorry. You can't just earn money and then give it away and continue to claim your means tested benefits.

ilikepinkthings said:

Thank you, that's very helpful. So it seems there might be a small overpayment of IS. But I'll need to double check. I'll definitely need to end my IS right away.

Is the best way forward just to put in a claim for UC and that will automatically end everything else? That's the bit I'm confused about, I don't know how to proceed. I don't know if I need to go in and seem them and "come clean" then claim UC or put in a UC claim first and then explain.

There may not be, it will depend on how much your earnings were in the past. There is the £20/disregard for IS.

Going forward, if you claim UC then IS will know you've done this and your IS will continue for 2 weeks, then stop. Whether you'll be entitled to that will depend on your earnings.

iza

Hi @poppy123456, sorry indeed it may not been the best advice. I thought it could be kind of solution. How @ilikepinkthings can predict if her business will be profitable next months ? What if in the next few months the profit will be 0£ and no sell for next few months will happen at all? I think 💭 that there should be kind of safe few months period for people to see how the business progresses before they switch benefits and after that safe period of course they return back what they own or had been overpaid. But such a period of few months trial (lets say 3 or 6 months ) when you trying to be back on track with your life simply does not exist. I think that should be simply fair. Otherwise by switching between benefits straight away put you at risk that the benefits will be suspended for recalculation for probably few weeks and you all payments will be stopped so you will not have money to buy food and pay the bills! You see when it comes to government they sometimes or most of the time left people waiting for benefits for weeks, month or years when the cases are in tribunals but they super extremely fast to get on top of you when you just own them 10 £ because you been overpaid. So I will ask is that ok ?

poppy123456

When claiming Income Support the earnings allowed are £20/ week, anything more than that then the IS reduces £1 for £1. Housing benefit and council tax reduction may also be affected by earnings.

I understand what you're saying iza but there are no rules for any trial of working and earning over the disregarded amount.

Universal Credit is a lot more generous with low earnings such as this because of the £344/month work allowance. It means you can receive that amount of earnings each month without it affecting any of your benefits entitlement.

Sue_Alumni

Good morning @ilikepinkthings and welcome to the online community.

What a great user name and I'm glad that poppy has been able to help you.

If you'd like to have a look at the rest of the forum, you can find all the latest conversations in our recent discussions category, all the different topics in our categories page, and you can meet and chat with other members over in our virtual coffee lounge too.

Let us know if you need a hand with anything, and I hope you enjoy spending time here.

By the way- you haven't messed up ! and we are always happy to help in any way we can !

racyguy

poppy123456 said:

When claiming Income Support the earnings allowed are £20/ week, anything more than that then the IS reduces £1 for £1. Housing benefit and council tax reduction may also be affected by earnings.
I understand what you're saying iza but there are no rules for any trial of working and earning over the disregarded amount.
Universal Credit is a lot more generous with low earnings such as this because of the £344/month work allowance. It means you can receive that amount of earnings each month without it affecting any of your benefits entitlement.

Hi I note that you mention earnings. The reason I bring this point up is because many years ago and friend of mine was in a similar position in starting up a new business from scratch and claiming the old jncome based Jobseekers.
He like Iza could not forsee what the level of earnings would be in the future. He was told to report his earnings every week when he had to sign on.
This he did religiously.
The question is what is the definition of 'earnings'? He took it to mean the net amount after all expenses had been recorded as in a mini profit and loss account. As an example he would tell the DWP that the week's net income was say £27 but the gross earnings were £194.

This went on for nearly two years until he was investigated for benefit fraud. The DWP insisted that it was the gross receipts that should have been reported not what the net profit was. It was his choice on what the gross income was spent on.

He wanted to argue this through court but was advised to plead guilty - he did and ended up with a 6 month prison sentence 5 of which was suspended.

Even today I still do not know if the DWP were right or not.

poppy123456

You seem to know a few people that seemed to have committed benefit fraud over the years. With regards to earnings, that's exactly the reason why the advice here was to claim UC.

Earnings disregard for JSA has only ever been £5/week anyway. For Income Support it's £20/week.

racyguy

poppy123456 said:

You seem to know a few people that seemed to have committed benefit fraud over the years. With regards to earnings, that's exactly the reason why the advice here was to claim UC.
Earnings disregard for JSA has only ever been £5/week anyway. For Income Support it's £20/week.

You are right I do know a lot of people from all walks of life. Some are the old East End Londoners who were into all sorts of things in the 60's mainly you could call them 'security guys'. Others that have done well for themselves and made it and those that try as hard as they can but never really succeed.

My question was simply what or how are 'earnings' defined by the DWP.
Is it the gross income or the net after paying say the finance on a new company car - a Range Rover, heat & light costs, staff wages etc ?
No one has ever given me the answer and where in the legislation it says what it is.

poppy123456

Net earnings apply to UC if you're PAYE. For a company car for example as part of salary sacrifice then this is added back onto your earnings.

For UC if you're self employed then you report your earnings and expences on the last day of your assessment period. Full details here. https://www.entitledto.co.uk/help/selfemployedexpensesclaimed

For tax credits the rules are different and i'm not familiar with those.

For JSA then as advised the disregard is just £5/week. For ESA then there's permitted work, where the earnings limit is £152/week after deductions and/expenses.

racyguy

poppy123456 said:

Net earnings apply to UC if you're PAYE. For a company car for example as part of salary sacrifice then this is added back onto your earnings.
For UC if you're self employed then you report your earnings and expences on the last day of your assessment period. Full details here. https://www.entitledto.co.uk/help/selfemployedexpensesclaimed
For tax credits the rules are different and i'm not familiar with those.
For JSA then as advised the disregard is just £5/week. For ESA then there's permitted work, where the earnings limit is £152/week after deductions and/expenses.

Thank you for that link. So for the self employed you only need to report the net earnings after allowable expenses.
Great that solves a problem I have had for years. I genuinely understood earnings for the self employed to be gross receipts with nothing deducted.
Assuming what the link says applied to the old JSA then my old friend should never have been found guilty.

poppy123456

For self employed you report all earnings received each month as well as all expenses. More details here https://www.gov.uk/self-employment-and-universal-credit

racyguy

poppy123456 said:

For self employed you report all earnings received each month as well as all expenses. More details here https://www.gov.uk/self-employment-and-universal-credit

Yes I now understand it - shame that this wasn't made clear by the DWP at the time - they were not interested in expenses being deducted from his self employed earnings.
Just shows that the ordinary man in the street can be stitched up by the DWP and not realise it.