Mumsnet has not checked the qualifications, experience, or professional insurance of anyone posting on Mumsnet and cannot be held responsible for any advice given on the site. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Universal credit- childcare

(17 Posts)
levi1 Sat 17-Aug-13 19:10:49

I've been studying up on universal credit and what changes it will mean for me as I am self employed. Being self-employed my income is subject to seasonal changes ad where as I will qualify for UC 8-10 months of the year the other 2 months might be touch and go. What I need to know and am having trouble finding out is if I don't recieve universal credit for 2 months of the year will they then stop my childcare costs also in the months I don't qualify?

RedHelenB Sat 17-Aug-13 19:44:32

I would think they would Levi. Why would you not qualify for 2 months of the year?

NarkyNamechanger Sat 17-Aug-13 19:52:10

Is it not still done using your annual income, how can they possible ask people to update each month thir income?

LynetteScavo Sat 17-Aug-13 20:00:31

The will do it on what you earned last year....and then give you an award this year.

If you are SE the best thing to do will be to pay yourself a steady wage from the business, and put any profit back into the business.

LynetteScavo Sat 17-Aug-13 20:05:44

Did that make sense?

Say you earned £10K last year. This year you would be entitled to universal credit, even though you are earning £10K each month this year. Then, next year you won't be entitled to any, as you earned £120K this year.

If you earn £9K one month, and £1K another, they won't be bothered, they will just want to know how much you earned overall over the year.

But if you suddenly started earning £200K every month, you need to let them know, as obviously you won't be entitled anymore, and if they keep paying you, you will owe them money (which will be a bummer if you earn only a totally of £5K the following year! - they won't care, and will want a repayment.)

OfflineFor40Years Sat 17-Aug-13 20:10:01

Lynette, as far as I understand it UC for self-employed will be based on monthly net income, on a cash basis. At the moment they say that losses incurred in one month cannot be carried forward, and there will be a minimum floor based on minimum wage - this means that in the months that you earn very little or make a loss you will be deemed to be making minimum wage and your credit will be adjusted accordingly.

As far as I can see it is going to be a nightmare to administer and is completely crap for the self employed. Especially those whose business is seasonal.sad

OfflineFor40Years Sat 17-Aug-13 20:12:00

I'll try and find a link which explains it better.

lougle Sat 17-Aug-13 20:13:49

UC is not going to be on an annual basis. It's going to be month by month.

I think you're right to be worried, OP.

OfflineFor40Years Sat 17-Aug-13 20:16:57

Can't link so here is the relevant bit pasted from the gov website:

Reporting your earnings Universal Credit is paid monthly direct into your nominated account. The amount paid each month is linked to how much you earn. When you report your earnings from self-employment you will have to supply monthly cashin and cash-out figures to Universal Credit. The DWP system will be closely aligned to Her Majesty’s Revenue and Customs’ (HMRC) proposed new cash basis accounting system for tax self-assessment.

You will be able to report your self-employed earnings between 7 days before and 14 days after the end of each month. If you fail to do so, your Universal Credit payment will be suspended. If you still haven’t reported your self-employed earnings a calendar month later, your claim will be terminated. The quicker you provide this information the sooner you will get the right support from Universal Credit.

I'm an accountant and several of my clients are going to find this incredibly difficult.

levi1 Sat 17-Aug-13 20:29:25

I'm a self employed courier and in the months of november ad december our workload doubles., but its at that time of year I need more childcare.

levi1 Sat 17-Aug-13 20:39:43

Offlinefor40years, I've been researching this the last couple of days and getting my figures together. It's seems unfair as I will no longer be able to do capital expenditure for my car and will be forced to do mileage allowance, although I do do high mileage, I will have no incentive to buy a new vehicle to do my work. And thankfully I am not vat registered as the vat is recognised as income 2 months out of three. I will however have incentive to put away money for my pension especially more in November and December, if I have read it right, Pension comes off gross profit.

NarkyNamechanger Sat 17-Aug-13 20:41:02

I'm assuming they are trying to get people to stop aiming by making it so awkward...

NarkyNamechanger Sat 17-Aug-13 20:41:12

Claiming

levi1 Sat 17-Aug-13 21:00:50

There not making it easy for self employed, there will be an interview to start with to make sure your business is viable. They will also assume how many hours you should be working according to your circumstances and then base what you should be earning in them hours on the minimum wage, so a nightmare if you have contracts that are only 20 hours and they say you should be working 35 . You have to provide cash in and out every month. You have to do your accounting in the style they say, no capital expenditure a real nightmare for those who need a vehicle and do little mileage. For some, like you say it might be to awkward to claim so they might just give up being self employed.

OfflineFor40Years Sat 17-Aug-13 21:01:10

That's right about the car - everyone will be forced to use the mileage method under UC. The gov guff claims that it is aligned with the HMRC cash basis but there are some significant differences, the car issue being just one. Another being tax paid which will be included in the calculation of net income. It is going to make it horrendously complicated.

I have no idea how they will deal with a household with 2 self employed people whose monthly assessments are on different days.

KatyMac Sat 17-Aug-13 21:07:19

I am dreading this

My business is not viable; I mean it's thriving (ish) I employ 8 people & provide a valuable community service but I don't actually get a wage - I live off 'Wear & Tear' council tax/water rate/insurance allowances & we eat out of the business

I may have to close & get a real job sad

levi1 Sat 17-Aug-13 21:22:06

Offline, I do my tax returns sharpish and know what I have to pay in January because of this I now pay a weekly amount by direct debit and will continue to do this, so I am hoping this will suffice as tax I can deduct every month.

KatieMac sounds like when you go for your initial interview you will have someone who knows nothing about your business telling you how to run it, lets hope you get someone sympathetic who recognises the fact you employ 8 people, in my eyes making you very viable.
There was a chapter in the paper I was reading about business who employ people but i never paid much attention as I do not employ, I will try to find it again.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now