Universal Credit Worries

[Donkey]

Mr. Anchovy, if you could do some digging into this it would be really helpful to a lot of members I assume


Universal Credit, Self Employment and the Minimum Wage | the void

Universal Credit and the self employed | Universal Credit

Universal Credit : Self Employed ?? Then PLEASE READ.... | Edgware & London Accountants & Tax AdvisorsAmity


3. INCOME REPORTING

Self-employed claimants will have to report their income on a monthly basis. This monthly assessment period will run from the date the claimant first becomes entitled to UC. The earnings will have to be reported online within seven days of the end of the assessment period. For most businesses this is a tight deadline and many will struggle to get the required information together in time. Failure to meet this seven day deadline will result in the UC payments being suspended. If the report is not made with four weeks the UC will be terminated.




Both me and DH are self employed childminders and while our business showed a profit this tax year it would not be considered enough to live on... and so we are supplemented by Tax Credits, Our business is successful as I have invested very heavily in quality resources. The children go on lots of outings so they learn about real items not just pictures in books.

From reading the above articles, I am very very very scared...

but hey I can always reduce my expenses by not feeding the children - they don't need to eat do they?? I won't follow the healthy nutrition guidance any more??? white bread, value beans and biscuits for lunch and snacks every day will be ok won't they? Oh and we won't go out any more, can't afford the expenditure on the car...
Winter, parents will have to send children with multiple layers as we won't be having the heating on anymore... oh and every child will need to come with a torch, won't be using the electric. (said with tongue firmly in cheek)


With this, the slap in the face that is more great childcare, and the news that the unemployed will be encouraged to register as childminders.....

seriously?? why the heck do I bother....

one way ticket to somewhere warm please....

[Donkey]

Universal Credit - DWP

[Donkey]

Universal Credits - Self Employed - MoneySavingExpert.com Forums

[marie55]

Why do we bother indeed!
In the 25 years I've been childminding, I have never felt as unsettled as I do now. I'm 60 and was planning to work for as long as I could doing the job I love, eventually being the oldest childminder in town Now the thought of retiring in 3 years and living off £107-45 a week sounds almost tempting (but will be impossible) Most of us put our heart and soul into childminding and after doing my tax return I know I'm certainly not in it for the money!
Living somewhere warm and carefree sounds good to me too Donkey but then I wake up and it's back to reality worrying about what the future has in store for us all

[Donkey]

for us its not going to be a dream...

we are seriously working hard now and will be going at some point in the future. I will have a BA Hons with EYT (the new EYPS) in the next couple of years and any international school will be damn lucky to have me.....

the more damage Truss, Gove and the government do the more determined I am to go....

[MrAnchovy]

Yes, I'm afraid this is what the government plans to do. There are two main issues for childminders currently receiving Working Tax Credit:

1. Monthly Profit Reporting
There is a LOT of lobbying going behind the scenes against this, and it has already been successful in modifying the proposals somewhat - believe it or not it was at one stage going to be that the amount of UC you got depended on the amount of profit you reported for the month: this wouldn't be too much of a problem for childminders, but for say a builder who might only be paid a lump sum at the end of a job they might have no profit for a couple of months, and then a big profit when they get paid that would wipe out their benefit!

2. Notional Minimum Profit
This is potentially a bigger worry. In a nutshell, self employed people will be assumed to earn at least a certain amount of profit (probably 18 hours at National Minimum Wage although it might be even more), and their benefits will be based on this. This is based on a policy decision that everyone receiving Universal Credit who is capable of working should be in full time work so no amount of lobbying is going to change government's mind at this stage.

The timetable for implementing Universal Credit is continually slipping back so it seems likely that any changes for the self employed will not be implemented before an election year.

[sarah707]

Mr A - does this section mean we will lose our special preferential expenses or do you think those will be ok?

(3) Where a person carrying on a trade, profession or vocation incurs expenses in relation to the use of accommodation occupied as their home, instead of a deduction in respect of the actual expenses, a deduction is allowed according to the number of hours spent in the assessment period on income generating activities related to the trade, profession or vocation as follows—

(a)at least 25 hours but no more than 50 hours, £10;
(b)more than 50 hours but no more than 100 hours, £18;
(c)more than 100 hours, £26.

[MrAnchovy]

Remember these proposed rules are only for Universal Credit, existing regulations and concessions for Income Tax purposes are unaffected. However they are introducing optional alternative accounting rules for the self employed which work on a similar basis to the Universal Credit rules, so you can give up your use of home expenses if you want to!

This will leave people reporting profit for Universal Credit monthy reporting purposes calculated on a different basis to the profit they actually earn and are taxed on. Originally this was going to cause a big problem but as I say they have now realised that it is impossible to adjust Universal Credit for self employed people on a monthly basis. So why bother reporting it? You may well ask.

[MrAnchovy]

Yes, I'm afraid this is what the government plans to do. There are two main issues for childminders currently receiving Working Tax Credit:

1. Monthly Profit Reporting
There is a LOT of lobbying going behind the scenes against this, and it has already been successful in modifying the proposals somewhat - believe it or not it was at one stage going to be that the amount of UC you got depended on the amount of profit you reported for the month: this wouldn't be too much of a problem for childminders, but for say a builder who might only be paid a lump sum at the end of a job they might have no profit for a couple of months, and then a big profit when they get paid that would wipe out their benefit!

2. Notional Minimum Profit
This is potentially a bigger worry. In a nutshell, self employed people will be assumed to earn at least a certain amount of profit (probably 18 hours at National Minimum Wage although it might be even more), and their benefits will be based on this. This is based on a policy decision that everyone receiving Universal Credit who is capable of working should be in full time work so no amount of lobbying is going to change government's mind at this stage.

The timetable for implementing Universal Credit is continually slipping back so it seems likely that any changes for the self employed will not be implemented before an election year.

I am sorry, it seems that changes to the proposals to which DWP had apparently agreed have not found their way into legislation that is now on the statute books.

This means that once on Universal Credit, the "profit" that you report each month ("assessment period") on a completely different basis to your real profit WILL be used to calculate how much benefit you are paid for that assessment period. And if your "profit" for the month is less than the "minimum income floor" you will be treated as if you did earn the minimum income floor. And here's the catch - "profit" for this purpose is calculated on a CASH basis. So in a month where you pay some big annual expenses - maybe your insurance, NCMA membership and Ofsted registration all come up together - your "profit" is going to be lower. And if a couple of parents pay you late that month you might not have any income at all! Oh and I forgot, there is no wear and tear allowance in the Universal Credit definition of "profit". So one month you might make a loss, but it will be assumed that you earned NMW for 35 hours pw - that's £938 profit - and your UC will be reduced accordingly. Next month your expenses will be lower with no insurance etc. to pay - and your income is double what it normally is because the parents pay you on time, as well as catching up from last month. So now the "profit" you report could be 2.5x what it really is and you could lose all your benefit payment that month!

This is really, really broken and everyone who actually understands how things work in the real world has been screaming at DWP for over a year telling them that: they are not listening.

[Mouse]

I wonder if the same rules will apply for childminders? I saw a calculator for UC and it actually listed childminders separate to general self-employed people.

The problem is, many childminders can't earn minimum wage because they are limited by law to the number of children they can look after. I did see on one forum where a cm said she could only earn £3 an hour (before expenses) because she had 2 young children of her own. The reply was "if you chose to charge such a low amount, why should the government pay you more? You should charge £6 an hour"...if only it was so simple!

[Donkey]

its all starting to make sense!!!!!

you will need to follow me on this one slightly....

xxx,000 on income support because they have young children are forced to become childminders to be a 'part of the workforce' they are told that UC is so great they will get topped up no matter how many hours they are working.

They get self employed status...

then they get hit by the UC self employment rules and even though they have 2 under 5 of their own and they take on a part time baby of 24 hours per week they will be deemed to have earned £111.42 per week (NMW x 18 - although some reading I have done has suggested that it will be based on SE working 35 hours per week!!!) when in actual fact this cm has earnt £84 before expenses....

so after expenses looking at around £30 - £40 but UC says she earnt £111.42 so will be paid less UC no matter what she reports as her bottom line...........



anyone see the correlation and that this Tory government are set out to screw the hard working women of this country???


hole in 1 for the government. Economy improves as spending less on welfare, unemployment figures are better as so many forced into self employment..........



I wonder, as UC replaces JSA and ESA, what happens when you have 0 children on roll and are therefore not earning anything, does the UC people still say that were earning 111.42???

[Donkey]

Mr A - does this section mean we will lose our special preferential expenses or do you think those will be ok?

(3) Where a person carrying on a trade, profession or vocation incurs expenses in relation to the use of accommodation occupied as their home, instead of a deduction in respect of the actual expenses, a deduction is allowed according to the number of hours spent in the assessment period on income generating activities related to the trade, profession or vocation as follows—

(a)at least 25 hours but no more than 50 hours, £10;
(b)more than 50 hours but no more than 100 hours, £18;
(c)more than 100 hours, £26.

I am worried about this...........
Yes Mr A we won't loose our preferential expenses for the purpose of Self Employment and Income tax with HMRC, however, will we have to remove the 10% wear and tear and 33% heating and lighting expenses for UC and chance to the above????

[MrAnchovy]

its all starting to make sense!!!!!

you will need to follow me on this one slightly....

xxx,000 on income support because they have young children are forced to become childminders to be a 'part of the workforce' they are told that UC is so great they will get topped up no matter how many hours they are working.

They get self employed status...

then they get hit by the UC self employment rules and even though they have 2 under 5 of their own and they take on a part time baby of 24 hours per week they will be deemed to have earned £111.42 per week (NMW x 18 - although some reading I have done has suggested that it will be based on SE working 35 hours per week!!!) when in actual fact this cm has earnt £84 before expenses....

so after expenses looking at around £30 - £40 but UC says she earnt £111.42 so will be paid less UC no matter what she reports as her bottom line...........

If you have a child under five you are covered by one of Ss 19, 20 or 21 of the Welfare Reform Act 2012 and are therefore exempted from the mimimum income floor by R 62(5)(b) of the Universal Credit Regulations 2013.

It is those with older children, or none, that will be caught and yes their minimum income floor will be 35 hours x NMW (or 16 hours if they have children at school under ?12 - not sure about this bit).

I wonder, as UC replaces JSA and ESA, what happens when you have 0 children on roll and are therefore not earning anything, does the UC people still say that were earning 111.42???

Yes, unless you declare that you are no longer gainfully self employed and are therefore available for any work creation scheme that they want to throw at you.

[MrAnchovy]

I am worried about this...........
Yes Mr A we won't loose our preferential expenses for the purpose of Self Employment and Income tax with HMRC, however, will we have to remove the 10% wear and tear and 33% heating and lighting expenses for UC and chance to the above????

Yes that is how it currently stands.

[MrAnchovy]

I saw a calculator for UC and it actually listed childminders separate to general self-employed people.

Please can you provide a link for this, or at least some clue as to where?

[Donkey]

If you have a child under five you are covered by one of Ss 19, 20 or 21 of the Welfare Reform Act 2012 and are therefore exempted from the mimimum income floor by R 62(5)(b) of the Universal Credit Regulations 2013.

It is those with older children, or none, that will be caught and yes their minimum income floor will be 35 hours x NMW (or 16 hours if they have children at school under ?12 - not sure about this bit).



Yes, unless you declare that you are no longer gainfully self employed and are therefore available for any work creation scheme that they want to throw at you.

ok, so while I have a child who is under 12 then its 16 hours per week, and seeing as both DH and I are cm's then this will apply to both of us...

I wonder how many weeks of the year MIF will be applied to.. seeing as I am only open 48 weeks of the year :/

[Mouse]

Please can you provide a link for this, or at least some clue as to where?

I'm still searching for it! As soon as I find it again I'll post the link.

[MrAnchovy]

ok, so while I have a child who is under 12 then its 16 hours per week, and seeing as both DH and I are cm's then this will apply to both of us...

Don't quote me on that, I'm no expert on this and in any case it keeps changing. And the rules for couples are even more complicated. And this is unlikely to apply to you for another 2 years, by which time the whole thing may have unravelled.

I wonder how many weeks of the year MIF will be applied to.. seeing as I am only open 48 weeks of the year :/

Oh you aren't allowed time off as self employed - yet another example of feedback provided during consultation which was completely ignored.

[Donkey]

great.........................................


employed people get nearly 5 weeks paid holiday per year, I get 4 weeks unpaid and might have less benefits



anyone thinking that they are trying to force self employed people into not claiming?????

Truss idea of increasing ratios sounding like a good idea right about now... only I won't be lowering my fees. Battery style childcare all round

^^^^^^^^^ holds head in hands and sobs

[tori4]

I am worried about this...........
Yes Mr A we won't loose our preferential expenses for the purpose of Self Employment and Income tax with HMRC, however, will we have to remove the 10% wear and tear and 33% heating and lighting expenses for UC and chance to the above????

Hi can someone point me in the right direction where to find more info on this?

I will be attending my local CM info sharing evening this week and believe this info needs to be shared

Many thanks xT