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Universal Credit: Effect On The Self Employed?


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#1 pollyp23

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Posted 21 September 2012 - 06:59

Has anyone read/heard/done any research on UC?

There was an article on the news last night that was worrying and someone I know who is a mobile (part time hairdresser) said it could effect many of us.

She says that monthly accounts will need to be submitted (strewth).

Also, as a self employed person, you will be expected to earn the minimum wage for 35 hours a week.

If you don't, she says you will lose any benefits and their self employment status!

She has been self employed for years, only works part time and only earns £5k or so a year. She draws no benefits, but if she lost the right to be SE, she then couldn't claim for fuel, shampoos, scissors, etc.

Surely she is wrong?
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#2 Strawberry

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Posted 21 September 2012 - 07:50

Always remember the news and media articles are often dumbed down, and often not accurate all in the name of making a good story.

Edited by Strawberry, 21 September 2012 - 07:51.

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#3 bongo

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Posted 21 September 2012 - 08:00

She draws no benefits,


This is the key - your friend draws no benefits and so won't be affected.
There are many approaching or just past retirement who gradually reduce their working hours for their trade - they won't be affected.
So long as they don't claim means-tested benefits ( currently Working Tax Credits, Child Tax Credits, HB, IBJSA, IS and the equivalents for the incapacitated and pensioners - there's others too but they are all means-tested benefits which the UC aims to replace ).

There has been and still is a problem with people claiming Working Tax Credits who claim to be self-employed on 30+ hours a week and declaring annual earnings of less than £6420 which gets them the maximum benefit package. While most of these are genuine, there are some that are not and on investigation they turn out not to be spending the 30+ hrs a week doing or seeking remunerative work, and part of the transfer to UC will be to try to identify and reduce such cases. I haven't seen the news item but am guessing that is what it was about.

Edited by bongo, 21 September 2012 - 08:01.

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#4 pollyp23

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Posted 21 September 2012 - 08:15

This is the key - your friend draws no benefits and so won't be affected.
There are many approaching or just past retirement who gradually reduce their working hours for their trade - they won't be affected.
So long as they don't claim means-tested benefits ( currently Working Tax Credits, Child Tax Credits, HB, IBJSA, IS and the equivalents for the incapacitated and pensioners - there's others too but they are all means-tested benefits which the UC aims to replace ).

There has been and still is a problem with people claiming Working Tax Credits who claim to be self-employed on 30+ hours a week and declaring annual earnings of less than £6420 which gets them the maximum benefit package. While most of these are genuine, there are some that are not and on investigation they turn out not to be spending the 30+ hrs a week doing or seeking remunerative work, and part of the transfer to UC will be to try to identify and reduce such cases. I haven't seen the news item but am guessing that is what it was about.

Thanks for that Bongo, its kind of what I thought....

However, one article (these are from Financial/Bookeeping/Accountants forums, BTW, not from the newspapers), said that one might lose the right to remain self emplpyed even if not drawing benefits.

That's the bit that worries me!
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#5 subbuteo

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Posted 21 September 2012 - 09:48

Has anyone read/heard/done any research on UC?

There was an article on the news last night that was worrying and someone I know who is a mobile (part time hairdresser) said it could effect many of us.

She says that monthly accounts will need to be submitted (strewth).

Also, as a self employed person, you will be expected to earn the minimum wage for 35 hours a week.

If you don't, she says you will lose any benefits and their self employment status!

She has been self employed for years, only works part time and only earns £5k or so a year. She draws no benefits, but if she lost the right to be SE, she then couldn't claim for fuel, shampoos, scissors, etc.

Surely she is wrong?


A lot of this is up in the air still. They tend to throw these things out as rumours to see what public reaction will be, and withdraw or change them if there is too much public outcry from people who might vote for them (eg public forest privatisation). However, the proposals for the childless self employed do seem aimed at all but totally eliminating any support from UC, and they haven't really been covered in the main stream media, probably because most people are wage slaves with kids and won't be that bothered unless their benefits start to dry up. If they assume minimum wage at £6/hr for 35 hrs/wk, that's £10,920 pa; if you earned that and claimed WTC, you'd get pretty much nothing, unless you qualified for child/disability elements.


Thanks for that Bongo, its kind of what I thought....

However, one article (these are from Financial/Bookeeping/Accountants forums, BTW, not from the newspapers), said that one might lose the right to remain self emplpyed even if not drawing benefits.

That's the bit that worries me!


I can't see how they could do this. Can you put a link up?

In general, informed opinion seems to be that the whole system will be a disaster. It relies on a new and complex IT system working properly, which they never do. Also, they're expecting 80% of claimants to do everything online - well, good luck with that!
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#6 Strawberry

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Posted 21 September 2012 - 12:08

A lot of this is up in the air still. They tend to throw these things out as rumours to see what public reaction will be, and withdraw or change them if there is too much public outcry from people who might vote for them (eg public forest privatisation). However, the proposals for the childless self employed do seem aimed at all but totally eliminating any support from UC, and they haven't really been covered in the main stream media, probably because most people are wage slaves with kids and won't be that bothered unless their benefits start to dry up. If they assume minimum wage at £6/hr for 35 hrs/wk, that's £10,920 pa; if you earned that and claimed WTC, you'd get pretty much nothing, unless you qualified for child/disability elements.




I can't see how they could do this. Can you put a link up?

In general, informed opinion seems to be that the whole system will be a disaster. It relies on a new and complex IT system working properly, which they never do. Also, they're expecting 80% of claimants to do everything online - well, good luck with that!


Stop people from being self-employed because they don't earn the hourly equivalent of minimum wage?That would be a bit too stupid to be true. I've not seen the articles mentioned but this all sounds like another way to keep on top of the Tax Credits scheme. I've never engaged in the TC system but it sounds like a real nightmare for both claimant and DWP, not to mention heavy on admin costs.
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It's common sense.
 


#7 Strawberry

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Posted 21 September 2012 - 12:14

Here's a link to a very good article which I found via a very simple Google search;

http://www.accountin...employed/528922

Having read that quickly it appears the changes are that if you are a claimant and self-employed you have 7 days after each month end to submit your accounts for that month. Also there'll be a minimum income threshold in order to be eligible for UC, this is to prevent subsidy of failing or non-profit making businesses.

Edited by Strawberry, 21 September 2012 - 12:17.

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It's common sense.
 


#8 pollyp23

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Posted 21 September 2012 - 13:08

Here's a link to a very good article which I found via a very simple Google search;

http://www.accountin...employed/528922

Having read that quickly it appears the changes are that if you are a claimant and self-employed you have 7 days after each month end to submit your accounts for that month. Also there'll be a minimum income threshold in order to be eligible for UC, this is to prevent subsidy of failing or non-profit making businesses.

So no worries if one is NOT a claimant?

WHat about if one is using the part time self employment to make a loss....?
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#9 Strawberry

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Posted 21 September 2012 - 13:41

So no worries if one is NOT a claimant?

WHat about if one is using the part time self employment to make a loss....?


No this isn't about making every self-employed person submit monthly accounts, flipping heck making everyone in the country who's self-employed do that would create a mountain of admin work and overwhelm the system for no reason at all.

Well the article says your income has to be above a certain level to claim the UC, if you are making a loss and your total income isn't above the threshold it would be logical that you wouldn't claim and wouldn't submit monthly accounts. If you income from all employment is above the level and you wish to claim then I guess you would. You don't have to claim any benefit or tax credit if you don't want to, many people stay out of the system even though they'd qualify for help because they simply don't want to have to go through all the hassle, and have the authorities nosing through what they consider to be their personal life. Best asking an accountant and DWP for proper, specific clarification.

Edited by Strawberry, 21 September 2012 - 13:43.

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#10 skyeman

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Posted 21 September 2012 - 14:06

No this isn't about making every self-employed person submit monthly accounts, flipping heck making everyone in the country who's self-employed do that would create a mountain of admin work and overwhelm the system for no reason at all.


This is exactly the point that the accountancy profession has been ramming down the throat of the Government for some months now. There are signs that the message is starting to filter through at long last.
It is highly likely that the final rules will not require monthly accounts to be submitted especially as the current requirement is for them to be in a different format and with different results to annual accounts - now how utterly stupid is that!
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#11 pollyp23

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Posted 21 September 2012 - 14:28

This is exactly the point that the accountancy profession has been ramming down the throat of the Government for some months now. There are signs that the message is starting to filter through at long last.
It is highly likely that the final rules will not require monthly accounts to be submitted especially as the current requirement is for them to be in a different format and with different results to annual accounts - now how utterly stupid is that!

Such as account submitted within 7 days of the declared make up time and expenses not being carried forward to the next month?

Or so I'm told...
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#12 skyeman

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Posted 21 September 2012 - 15:06

Such as account submitted within 7 days of the declared make up time and expenses not being carried forward to the next month?

Or so I'm told...


It gets worse............. a loss in one month cannot be offset against a profit the next month - how stupid and insane is that?

Good info. here http://www.accountin...dit-regulations
and here.... http://www.accountin...employed/528922

and yes, I AM an accountant. /biggrin.png' class='bbc_emoticon' alt=':D' />
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#13 pollyp23

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Posted 21 September 2012 - 16:19

So, in summary, as long as I (and many others) are not claiming any benefits, its business as usual with annual self assessments, books made up annually and no worries?
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#14 Strawberry

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Posted 21 September 2012 - 16:34

So, in summary, as long as I (and many others) are not claiming any benefits, its business as usual with annual self assessments, books made up annually and no worries?


From what I see yes this is only for UC claimants, but better wait until someone more qualified to come along to confirm this. Asking every single business/self-employed person to submit each month would surely be a waste of time and be completely unmanageable and irrelevant(not that the system won't be anyway!). It's usually up to you to claim, they don't chase you offering money it wouldn't make sense.

If in doubt ask your tax advisor/accountant.

Edited by Strawberry, 21 September 2012 - 16:35.

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#15 pollyp23

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Posted 22 September 2012 - 16:33

From what I see yes this is only for UC claimants, but better wait until someone more qualified to come along to confirm this. Asking every single business/self-employed person to submit each month would surely be a waste of time and be completely unmanageable and irrelevant(not that the system won't be anyway!). It's usually up to you to claim, they don't chase you offering money it wouldn't make sense.

If in doubt ask your tax advisor/accountant.

I don't have an accountant and my tax advisor(s) have been HMRC, including 3 workshops that they used to run and a home visit by one of their advisors to go through my books and help me complete my first SA.
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#16 Danish Pia

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Posted 24 September 2012 - 10:15

It gets worse............. a loss in one month cannot be offset against a profit the next month - how stupid and insane is that?

Good info. here http://www.accountin...dit-regulations
and here.... http://www.accountin...employed/528922

and yes, I AM an accountant. /biggrin.png' class='bbc_emoticon' alt=':D' />


And a very good one /smile.png' class='bbc_emoticon' alt=':)' />
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#17 skyeman

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Posted 25 September 2012 - 15:06

So, in summary, as long as I (and many others) are not claiming any benefits, its business as usual with annual self assessments, books made up annually and no worries?


Quite correct - go to the top of the class. /tongue.png' class='bbc_emoticon' alt=':P' />
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