Universal credit and self-employed business assets

[restlessmonkey]

Hi everyone,

My first post here. Actually stumbled across this when trying to find info about the above. I've been tying myself in knots and making my existing chronic pain worse worrying about an imminent migration notice from tax credits to UC. Not really worried about the amounts but more how what I have will be considered. Like many self-employed people (and it's my own fault I know) I've not exactly been very strict when keeping all the business finances separate from my personal accounts, but I do have records about my income etc. My concern is that I've heard that legitimate self-employed assets aren't considered in the means test, but a fair amount of my business earnings went into the person account just due to the ease of logging into it and some clients already having existing account details before I had everything set up ages ago, and it being easier just to keep it that way. I know that's not strictly how things should be done.

My question is how do I go about untangling this? I use the same pool of money for business expenses, support worker payments, product purchases etc. If I work everything out and just move it all into the business account, that will probably look as if I'm trying to hide something so it's not considered in the means test. I have no issue explaining everything, but will they even listen? Everything seems to be so 'sanction first and force an appeal later' these days and just seems so toxic and unsympathetic. Should I make the transfer and then wait to be asked, or leave everything, wait for the account checks and then explain? I'm just so confused. On top of that I'm also a disabled person so trying to keep things simple (by just keeping everything in one pot) was what worked for me at the time.

Any advice or just some support much appreciated. The last 2 months since I received the notice that my migration notice was on the way have been horrible. I also use an alternative format for letters and so now I'm terrified that the letter is late and in fact I won't even have the same amount of time to do what is needed to migrate as everyone else. It's happened to other disabled people and they had to take the matter to court.

Thanks.

Do forgive me, I'd normally sign off but I'm scared to even give my name in case it looks suspicious that I'm even asking this just to do the right thing.

If you're self employed then you and the business are one and the same. All your profit is counted as your income. It is only separate if you have a LTD business and are an employee of that business.

One thing you might want to set up before migration (if you're not already doing it) is paying your tax monthly rather than annually. While tax credits were calculated on annual income, universal credit looks at your income each month, and can only disregard money for tax if you've actually paid that money to hmrc

Business assets, ie tools of your trade etc, are disregarded as capital.

Universal Credit works monthly with each month, the first starts on the day you claim, being called an Assessment Period (AP). At the end of each AP you'll need to tell UC your profit/income for that period.

Couple of links below that might help:

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

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

This is categorically incorrect and assumes all self-employed people are sole traders when there are quite a few different types of business and ways of handling income for tax reporting and legal reasons and the legal and tax implications of these can't be dismissed like that in a single sentence.

OP can you get an hour's consultation with an accountant to check your financial reporting over and afterwards, just update all your payment details so they go to your business account from now on? Because from what you've described, they might think you're cooking the books for tax reasons if you leave it all as it is.

You need to sort out your financial reporting and handle the money in a more organised way because never mind UC, you could have HMRC coming after you and you do NOT want to get audited right now.

Also please don't use your real name on publicly searchable online forums ever, regardless of what you're posting about.

@KaiserChefs

This is categorically incorrect and assumes all self-employed people are sole traders when there are quite a few different types of business and ways of handling income for tax reporting and legal reasons and the legal and tax implications of these can't be dismissed like that in a single sentence.

The sentence was correct though. The poster you quoted mentioned not being a limited company as the alternative.

Hi everyone, thanks so much for the replies and sorry I didn't get back sooner; yesterday was a bad pain day. I appreciate the tips and will get an appointment with a financial adviser and start getting people to change their payment details so their payments go into the business accounts from now on. It also made me really angry though as it now seems the guidance on the DWP site is misleading. It makes it seem as if you are gainfully self-employed they say they will not consider business assets as part of the calculations for how much UC you get. I always thought cash was an asset.

Anyway one more question; how are fixed term bonds handled? The UC guide for decision makers mentions bank accounts but not accounts where the balance cannot be accessed. The website says they take into account any assets which can be realised (such as shares that can be sold or money that can be withdrawn) but with many bonds you can't touch it for the duration of the bond, unless the person has died or something. Would I simply be penalised when the bond matures?

Thanks again for being so patient with me and for the support. This is a horrible system that causes so much worry and pain just for wanting to do the right thing.

Re your question about fixed term bonds - the money you have in the bond will be counted as part of your savings, even though you can't access it right now. As long as you wait for the migration notice, you'll get transitional protection for a year, so any savings over £16,000 won't be counted when working out your UC entitlement for the first year. After that, savings over £16,000 will stop uc entitlement.

Thanks very much, I'm clear on that now. Much appreciated and once again thank you so much for all the support.