Irregular self employed income and benefits?

[Sixeight]

I earn a part time income from self employment and am separating from stbxh.

My income is irregular - I invoice 6 times per year with some smaller invoices if new I take on new clients in between these invoice dates. So this means that although my annual income is c.£15,000 some months nothing comes in, but other months between £1-3k comes in.

How is that managed with respect to Universal credit?

Thank you.

As far as I know UC is based on monthly income, so you may be eligible for months when you earn nothing, but aren't eligible for months when you earn over the threshold.

Useful website:

www.uceplus.co.uk/self-employment

You have to report your income and expenditure every month, and your UC is based on that.

However, if you have been in business for more than 12 months, they apply something called the "minimum income floor". This means that if you have earned less than the equivalent of (iirc) 35 hours pw x NMW for your age, they treat you as they you had made that amount.

However, by being canny in when you invoice/bank income, you can spread your income more evenly throughout the year.

Oh, and if your income exceeds the amount at which your UC entitlement stops by more than £2,500, the excess is carried forward and added to your income the following month.

(I can't believe that I forgot that - pre-Covid I delivered training on this very topic! )

Remember losses carry over, so if your Expenses put you in a minus figure (so to speak) then the quarterly "bump" of Earnings isn't then quite as remarkable or as likely to be subject to Surplus Earnings.

For example:

January: No income, but Business expenses of £100
February: No income, but Business expenses of £100
March: No income, but Business expenses of £100
April: £2000 income, Business expenses of £100

So £2000 income in April, would have April's Business expenses taken off and also have the "carried forward" losses taken off for Jan / Feb / March.

UC would use £1600 as your Earnings, and subtract the Work Allowance (£293 or 515) and then apply the taper (x 0.63).

The figure left at the end is what would be subtracted from your overall UC Award (either £823.41 or £683.55 depending on your Work Allowance).

The minimum income floor can be set below 35 hrs depending on personal circumstances ie if you have young children/their ages etc.

@8dayweek

Remember losses carry over, so if your Expenses put you in a minus figure (so to speak) then the quarterly "bump" of Earnings isn't then quite as remarkable or as likely to be subject to Surplus Earnings.

For example:

January: No income, but Business expenses of £100
February: No income, but Business expenses of £100
March: No income, but Business expenses of £100
April: £2000 income, Business expenses of £100

So £2000 income in April, would have April's Business expenses taken off and also have the "carried forward" losses taken off for Jan / Feb / March.

UC would use £1600 as your Earnings, and subtract the Work Allowance (£293 or 515) and then apply the taper (x 0.63).

The figure left at the end is what would be subtracted from your overall UC Award (either £823.41 or £683.55 depending on your Work Allowance).

Just to add op, you would only get a work allowance if you have children or limited capability for work. Otherwise the taper starts straight away.

@Babyroobs Yes very good point - I assumed the OP had a child so would qualify for the Work Allowance. Sorry for jumping to conclusions.

I have two children, both at secondary school. I get dla for one of them (middle rate care, lower mobility)

How would that affect my UC award?

Thank you for all of your replies so far. @8dayweek I’m lucky that actually, my self employed income has very low expenses, especially since COVID as everything has been online.

@mbear does the minimum income floor apply if a child is in receipt of dla? The care that the child needs, compared to a non-disabled child of their age, means that I would have to limit my working hours if I was employed as they still need taking and collecting from school. I would be late to work on many occasions due to school refusal, and I would get called out of work every few weeks due to meetings at school/ picking them up unexpectedly due to behaviour issues etc.

I was wondering though - what would stop unscrupulous people claiming UC for most of the year by just ensuring their invoicing is, for example, quarterly? Ie no income for 8 months of the year, but lots of income for 4 months?

(I’m not going to do that! Th3 nature of my work means I invoice 6 times per year with many additional smaller invoices in between)

@Sixeight

I have two children, both at secondary school. I get dla for one of them (middle rate care, lower mobility)

How would that affect my UC award?

Thank you for all of your replies so far. @8dayweek I’m lucky that actually, my self employed income has very low expenses, especially since COVID as everything has been online.

@mbear does the minimum income floor apply if a child is in receipt of dla? The care that the child needs, compared to a non-disabled child of their age, means that I would have to limit my working hours if I was employed as they still need taking and collecting from school. I would be late to work on many occasions due to school refusal, and I would get called out of work every few weeks due to meetings at school/ picking them up unexpectedly due to behaviour issues etc.

I was wondering though - what would stop unscrupulous people claiming UC for most of the year by just ensuring their invoicing is, for example, quarterly? Ie no income for 8 months of the year, but lots of income for 4 months?

(I’m not going to do that! Th3 nature of my work means I invoice 6 times per year with many additional smaller invoices in between)

On UC you would get an additional disabled child element. You can also claim a carers element on Uc , it doesn't matter how much you earn.

You would need to check up to date guidance/benefits checker, but if you declare you are a cater for your child that gets DLA, you would be place in the No Work Related Requirements work group, which means they cannot apply the MIF to your claim. You would still need to declare the SE but you would then just be free to declare your income. Your income is still subject to affecting how much UC you get, but there is no assumed level of income whether you have earned it or not (which is what the MIF is/does).
This may help with your uneven income (ie more some months than others etc).

Sorry! Loads of typos in that…. at the dentist and typing in a rush!