Have received a letter about switching to Universal Credit

[2anddone]

Please talk to me about Universal Credit!!
Hi
Have just had a letter through today saying that I need to apply for Universal Credit by end of Oct 2023 as they are stopping my tax credits.
I am not going to lie I have been dreading this letter!!
What do I need to do each month? As I am self employed and my incoming/outgoing changes monthly!
Do I have to tell someone each month if so how?
Trying not to panic but I suffer from anxiety so struggling with that!!
Please help

There’s another thread on this at the moment which may help..

https://www.mumsnet.com/talk/money-matters/4837447-universal-credit-managed-migration-thread?page=3&reply=127539398

If you're self employed then you'll need to report your earnings etc in each monthly Assessment Period of your claim. Two links below, one form HMG and the other for the Advice/Charity sector about UC as Self Employed earnings:

https://www.gov.uk/self-employment-and-universal-credit

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit-income-and-capital/Self-employed-earnings

The biggest trap affecting the SE moving from legacy benefits is the Minimum Income Floor. It's explained in detail in the second link but in brief, UC contains a built in assumption that an established SE business will make at list the equivalent of the Living Wage. I think though there's a year's 'amnesty' on new claims to UC before it's applied.

Yes you will need to report self employment earnings as above.
You may need an initial interview if Uc to establish that you are gainfully self employed - so checking that your business is viable and bringing in money.
Uc then works on what earnings you have reported during your monthly Uc assessment period. As above you are expected to earn a minimum income floor and this amount will be set depending on your circumstances, ages of your youngest child etc.

I never quite understand how it works with being "self employed" and then claiming TC/UC... Can anyone just start up a business and then no matter how unprofitable and non-viable it actually is they can just have it effectively subsidised by tax payers?

@Yants on Tax Credits yes, people do get away this. It's been massively abused for years by the pretend self employed raking in Tax Credits sometimes for made up self employment just to avoid having to sign on and look for work. UC has closed this loophole.

On tax credits I think they used to check periodically that the business was viable but it is a lot stricter on UC. When someone sets up as self employed on UC they will have an initial meeting to see if the business is viable. they then get a 12 month grace period where they are exempt from the minimum income floor, so if profits are very low, their actual profit is still used to work out what UC payments they get. After 12 months they become affected by the minimum income floor ( MIF ). This MIF will be different for each person dependent on the work commitments set by their Uc work coach. So for example a single parent with a child aged 3 might be expected to earn 16 x nmw per week. If their self employment profit does not reach that amount, then that amount of earnings is still deducted from their total UC award, so they can end up worse off than someone else regularly earning 16 x nmw from normal employment. I think if you had very little self employment earnings for months on end then they can just deem your self employment not viable and ask you to look for paid work. The 12 month grace period is there to acknowledge that businesses do take some time to become profitable or may lose money in the first year. With transitional protection I am really not sure whether, when you switch to UC they give you that MIF grace period even if you have been self employed for years, or whether the MIF applies from day 1. It is all a bit complex on UC.

I think this was part of the reason why Uc was introduced wasn't it ? People on tax credits would claim they were self employed for 16 hours a week in some hobby/ craft job or selling stuff on Ebay just to be significantly better off as that made them eligible for the working tax credit component. They would make barely no profit but claim to be self employed and it was hugely abused. Now it is a lot stricter for everyone on UC.

@babyroobs. Yes, as an assessor I know that HMRC did not have any interest or time to look at all the people declaring £100 profit a month just to get WTX instead of signing on for Job Seekers. UC and the MIF will put a stop to this whilst the 12 month protection will fairly protect the genuine self employed and give them a chance to get started.

Thanks everyone this info is all very helpful