How hard is it to be self employed when in UC?

[Lovemusic82]

Currently claiming tax credits and HB, due to switch over to UC this year. I am a carer to a disabled young adult and have been unable to work due to having to care for DD (single parent). I’m struggling financially and mentally with not working. The only way I can really work around dd is to be self employed. I keep hearing that it’s pretty tricky to be self employed whilst claiming UC? Because I’m on my own I would have to earn a lot not to claim UC and because my times limited due to DD I can’t earn a full time wage. I am claiming carers allowance so ideally I would need to earn under £149 a week to keep my cards allowance of £76 a week, I wouldn’t be able to work enough hours a week to warrant losing carers allowance as DD is home a lot. So how hard would this be to do on UC? How does it work? Do I have to tell them each week what I have earned so they can adjust my UC? Would it involve going long periods of time with no UC whilst they calculate it?

Sorry for all the questions.

I can't offer any advice over switching to UC or what the rules are with regard to carers allowance etc. Although I believe that you can claim extra for the carers element of UC.

But when it comes to claiming self employment, there are two ways to go.

The first is to notify them that you are becoming self employed full time (or however many hours they say it must be). For this they will expect you have an interview with them and explain your business plan etc and show that you are registered with HMRC as being self employed.

However, they will be expecting you to do this full time which may not fit in with your caring responsibilities so it would probably be best if you just report any self employed income as and when it arises (just like you would if, for example, you got a one off temporary job for a couple of days) rather than declaring that you are self employed

You have to report your self-employed income and expenditure online once a month (so that's how much money you made and how much you laid out on expenses etc) to give a monthly profit.

Then, for every £100 of profit you make in a month, your UC is reduced by £55.

So, let's say your UC is £800 per month (just a random figure). In a particular month you report that you have made a profit of £100 self employed. The following month your UC will be reduced by £55 to £745.

Then the month after that you do not report any profit so your UC then goes back up to £800.

Thank you. They don’t seem to make things easy for people that can’t work full time. Chances are I wouldn’t make profit for the first few months as I would need to pay for insurances and police checks. I was self employed a few years ago whilst claiming tax credits and it was relatively easy as I was earning roughly the same each week/month but the process of letting them know my earnings each month was pretty simple and I was only working part time. Eventually my dd will go into residential housing and I will be able to work full time but until then it feels like no one wants me to work :(

I claimed while self employed, it was really straightforward. Given you’re a carer you’ll not have a work commitment so won’t need to worry about being “gainfully employed”, which means they consider you to be working full time on your business and means you won’t have to commit to looking for work.

So you can work effectively part time or around your caring responsibilities. There will be an amount you can earn before your benefits are reduced made up of your personal allowance, an amount that reflects your caring responsibilities, housing costs where applicable. Once you earn more than that your claim reduces by 55p for every pound.

You submit your self employed earning less any business expenses and they work out how much profit, or loss, you’ve made in that month. They then apply the 55p reduction to anything over your entitlement. If you make a loss, that gets carried over to the next month.

So for example if you have an entitlement of £800 and you’re setting up your business you might bring in £100 but have costs of £200 because you have equipment costs, insurances etc. You enter £100 as your income, £200 as your outgoings and so would have a loss of £100. You’d get your full entitlement and they’d carry the £100 loss forward to the next month.

The following month you bring in £400 and have expenses of £50, so your profit would be £350 but they’ve carried your loss forward so they’d take that £100 off your profit and would apply the 55p reduction to the remaining £250. So that month you’d have the £350 profit for that month plus your entitlement less 55% on the £250 profit so £800 less £137.50

So in month 1 you’d get your £800 entitlement and in month 2 you’d get £1,012.50. I found it really easy to submit and calculate and was definitely better off for working.

I meant to say the £1,012.50 is made up of £350 profit plus benefits of £662.50, not that you’d get £1,012.50 in benefits alone.

Hope that makes sense.

Jellycatspyjamas thank you so much. I was having a panic but did think because I am claiming carers I don’t need to work full time hours. Ideally I want to earn £140 a week so I don’t lose my carers allowance. I did a benefit check last night and worked out by earning £140 I will be £40 a week better off than I am now, not a huge amount but it’s something. I really want to work so I have a sense of meaning, at the moment I feel like I mean nothing other than being DD’s carer.
I also spoke to a friend today who is in a similar position but not a carer and they said they just have to let UC know each month what they have earned and it’s pretty simple. I’m now feeling a little more confident. I needs to set up a viable business that can grow when/if dd moves out because when she goes I will lose a lot of money and her mobility car. I need to make enough to buy a car and cover bills if she was to be found a residential setting, hopefully then I could increase my work/clients.