Universal Credit and the self employed

Self employed people may be hit by the new Universal Credit. Under new rules the Government may impose a miminum level of assumed earnings based on hours worked and minimum wage. The white paper states;

“Some self-employed people under Tax Credits report very low levels of income. We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported.”

Are you self employed? How will this affect you?

If you are self employed then please take a look at Cathy Ashley’s excellent blog regarding Universal Credit and how it may affect you :  Universal Credit and the Self-Employed


  1. Terry Clay says:

    We know of many people who do not earn that much from their self-employment, even after a year or more, not least because a lot of needed work is not remunerated (marketing, bookkeeping eg). Perhasp there should be a lower threshold of 14 hours at minimum, wage which is about the number of hours paid work that would disqulify you from being catagorised as unemployed “!

    • Very valid points Terry, hopefully this will be considered before 2013 arrives.

    • anon1 says:


      • stevendurrant says:

        Yeah, it’s full on evil to do that. Like child sacrifice or something. Why can’t people work hard like those clever financeers.

        I’m sick of people eeking out £10 a week from the system to just spend it on EATING FOOD! Why should people be able to eat food when we need to give more money to the banks? It’s madness.

      • Vivien says:

        It’s not brilliant. My husband is my carer and works to support us. But as he is my carer he is not allowed to earn more than a £100 per week. He runs his business mainly from home and genuinely spends at least 30 hours a week on what could be called administration. But most of the work that actually gets paid for he employs others to do. He has all the paperwork and receipts to prove that he pays out most of the income from the business to other, mainly younger people, who work for him. But the government will class his income as higher just because they say it is and not because it actually is. That means that I , a disabled person aged 60, and my husband are forced into poverty as he can’t leave me for too long on my own and he can’t get benefits because someone in government who has never been self-employed chooses not to believe that many people who run small businesses don’t actually earn the minimum pay rate. this will only cause more to have to cease trading and go onto full benefits.

      • Vivien says:

        If small businesses earn so much money why do so many fail? Because self-employed people don’t earn much at all. You are getting confused with owners of businesses such as Sainsbury and ordinary working people who do sewing etc from home. Is it better for the government to give these people working tax credit or universal credit. I know which will cost the most.

      • Worried minder says:

        How unkind. I trained to be a child minder whilst working full time because I struggled to get time off for the shocking amount of school holidays and the fact I have no family to help or any cost effective child care. I rely on tax credits and also do not claim for childcare from the government as I look after my own children. As a minder there are mounds of rules and regs. The size and type of home you have restrict how many children of what age you can care for which has an effect on how much you are able to earn. You have all the normal expenses of a small business and you also get done over by some clueless people. I am currently chasing unpaid wages through the small claims which I will probably never see. I am a good, honest minder trying to make ends meet and help other parents by being flexible and giving good rates. I earn enough to pay my bills and not much more but am working for myself not working the system. Before slating childminders you should step into their shoes and see what they have to achieve to start up and to continue as a service. Some people are so short sighted and exceptionally rude!

  2. Debbie says:

    Basing the floor of assumed income on declared hours is a stupid approach. I currently work 60 or so hours a week in my business but i would simply declare my hours at either 16 hours a week or 24 hours a week just to minimise the impact of the floor on receiving benefits, always assuming I am entitled to any.

    I know the minimum hours side of WTC is getting dropped, i.e. people working ten hours will no be treated the same as people working 20, 30, 40 hours under the new system, which is a good thing. But asking self employed people to control the floor by declaring their hours is as perverse as the current system.

    If the government want to go down this track they should be saying something along the lines that, for the purpose of determining benefits payouts the minimum hours for people electing to become self employed rather than being available for working for someone else is deemed to be 24 hours a week (or 30 hours, 37.5 hours, whatever makes sense, but no more than a normal working week). So therefore,( again, just for the purpose of deterimining the level of benefits), the net profit before tax for self employed people is implied to be 24 hours @ £5.93 an hour.

    So, imagine a benefit calculator. You enter in your profit for last year (the usual method). The calculator then asks the question is this profit less than 24 hours per week @ £5.93 an hour for 46 weeks (i.e. year, taking out the usual four weeks leave and two weeks of statutory holidays that would be available to the person as paid time off, were they working for someone else). if the profit is less, then the profit is set at £6546 per annum.

    The government shouldn’t give a toss how many hours a self employed person works. It simply needs to deem a certain amount of hours worked and calculate an implied profit.

    Yes, I realise there are many businesses that don’t make that amount in profit. but the system is perverse. There’s no reason to make much money because either way, you get paid, if not by your customers then by other taxpayers. I’m self employed. There’s every reason to, if I could afford to buy one, own a nice car, for example, and to pick and choose the kind of work I do.

    How about a slightly different approach. For the first couple of years of the business (and this being a lifetime maximum for the tax payer, to avoid having serial start ups) the system continues as for now, so if you make a loss you get full benefits. For the next three years, the net profit for the purposes of calculating benefits/WTC etc is the higher of your actual profit or
    24 hours @ £5.93 * 46 weeks (24 hours was mentioned in an earlier iteration of this debate as being the working hours threshold, up for 16 hours) . And again, this is a one time only concession. A bit tricky differentiating between individuals and families, because how do you apply this concession if the family splits up, or if the mother is a stay at home mum who want’s to benefit on the benefits side of things but doesn’t want to work in the business?

    Thereafter, the implied profit is 37.5 hours a week (so full time) * 46 weeks * £5.93.

    Surely this would then be sending a message, saying the government will support the self employed, by giving them full benefits , (i.e. implied profits zero, so you do as now, take the higher of your profits or zero, losses not available except for income tax offset in future years) for two years, then setting implied profits at a part time wage for the next three years and thereafter implied profits based on a full time income.

    I note that even two people both getting the minimum wage, in a family of four, would still entitle them to a myriad of benefits including some help towards housing costs and child tax credits. Not to mention family benefit. So surely it is not so onerous to treat a self employed family as at least having the income as if one person in the family was working full time on the minimum wage?

  3. Tony Bowman says:

    I’m employed with a small self-employed income and I like this idea.

    Some self-employed people who know enough about the system are able to maximise thier income by, for example, setting up as a limited company and recieving dividends instead of taking drawings. Dividend payments are not income for WTC so the person can declare themselves employed at 30 hours a week and receive maximum WTC based on £0 earnings. Such methods are not illegal or wrong, but in some cases a self-employed person can have a signficant advantage over an employed person with a similiar employed income.

    This rule will force those people to take an income from their self-employed activities. It also means that those that move into self-employment will be forced to think more carefully about the income thier business may generate.

    There will be some cases where, for example, there really is no income from a business, or all the income is being used in start up materials and equipment. For those people, there will no longer be a fall back safety net. That could be redressed by disapplying the rule for a finite period, maybe the first year of a claim and/or deeming the hours worked at a fixed level. Under the current system, that would almost certainly be at 16 hours.

    Those who misdeclare thier hours, as Debbie quite understandably suggests, will run the risk of having sanctions applied upon discovery, and under unviersal credit there will be fewer defences against overpayment recovery and increased sanctions for incorrect claims, or ‘fraud’ as the DWP call it. In terms of overpayment recovery, those who are currently receiving tax credits will most likely know what that means…

    • MickGJ says:

      Dividend payments are counted as income for WTC purposes

    • Katy says:

      I have a different understanding of this issue. In order to claim WTC as the director of a limited company you need to have an employment contract stating how many hours are worked (presumably 16+ as things stand at the moment). Unfortunately, you will then need to pay yourself a minimum wage in order to comply with employement law. Thus the only way you can make £0 earnings is to have no employment contract and therefore be unable to claim WTC).
      Plus, as someone else has stated, dividends count as income (after disregarding the first £300).

    • A distinction: dividends are paid to shareholders. Shareholders are not employees and it does not require any work to be a shareholder. Directors are employees, as stated above. The UC rules do not in and of themselves do anything to remedy the ills of company law and accounting – but they do penalise the self-employed with variable hours and income.

  4. If you declare fewer hours of work in self-employment then the intention is that conditionality will apply for the remaining hours. In other words you will have to demonstrate job-seeking etc for that period of time.

    • Haneefah says:

      Gareth How many hours/how much money do I need to earn a week self employed? I am a single mum with a 5 year old? I only found out about the severity of this UC today and I am a home eductator and I am getting mixed stories. Will this amount be after tax and including profit or just profit. sorry I am new to business so please explain it as much as you can thanks

  5. Terry Clay says:

    At present a single person who is unemployed can claim Local Housing Allowance for their accommodation plus Job Seekers Allowance of £65
    They can opt for self-employment and still be eligible for LHA if their earnings are low enough plus Working Tax Credit of ca £43 a week?
    In other words by sacrficing about £20 a week they can exercise their entrpreneurial skills without restraint (they will just have to report earnings to their District Council for clawback of LHA at 67p in the pound).

    Surely self-employment (especially where there are few job) is a constructive initiative by the individual, and a benefit to society, which shoudn’t be discouraged by a proposed rule that seems to be both arbitrary and counter-productive!

  6. Duncan Smith Lied On His CV - ask him to pay back his salary from year dot says:

    IDS had a pathological scheme when he dreamed it up -it doesnt work on paper, never did, never will. Benefit should look at actual need, rather than the ‘average’ worker, as there is no such person.

  7. Jeremy says:

    This is grossly unfair on the farming community, who work very long hours and in many years get little financial reward. Combined with the changes to capital allowances, this will mean many small farmers will have to give up.

    • Yes, I’d been worrying about farmers. It seems to me that the government’s idea of ‘self-employed’ is the plumber or building contractor who charges by the hour – and possibly is able to increase hours at will and gain a proportionate increase in remuneration.

  8. What about self employed people who have spells of unemployment. As most self employed people will know, work can be sporadic and inconsistent and there will be days or weeks when you earn £0.00 due to illness or quiet times yet you still have outgoings .

  9. Funkyhamsta says:

    The only thing that has ever worked for me with any benefit, be it from Councils or the Tax Dept. are means-tested benefits!
    It’s a simple idea – you start up in your self-employed business, you try to earn above the threshold and if you fail to in full or part, you get a top up from the Government.
    For people who are self-motivated, this is the only way it can really work. There’s no room for risk-taking with the new idea – that would destroy innovation and experimentation – which many new businesses are. Even the most ‘apparently’ robust financial plan or business plan can fail.

    It’s a crazy idea – I’m sick of the state assuming anything about my work. I can provide them with a quarterly statement of accounts, so they can adjust top-up benefits accordingly – if they assume I’m always earning money, we will simply lose and fail.

    Definite no to every part of this new benefit regime – it sucks and it hands all authority to one body, who can, through choice, legislation, or for any reason withhold all benefits of the state.

    It’s the door to ultimate slavery – play ball or we cut you off.

    For people like me, this is an affront to my dignity, freedom and humanity.

    No, no, no….please!!!

  10. joh smith says:

    This is a fab idea. Childminders are the worst at ripping of the system ad claiming low wages by putting all and sundry to their profits, excellent idea.

    • gwenhwyfaer says:

      joh/anon1, obviously I am sympathetic to the annoyance and frustration the childminder who ticked you off has caused, but I do wonder whether spiting every other self-employed person in the country to get back at her(?) is exactly *proportionate*… Glad to see your shift key unstuck itself, by the way. It is annoying when they get stuck down like that, isn’t it?

      On other points:

      Tony Bowman, my understanding is that you’re mistaken – if someone is employed by a company, even if it’s their own company, they are *certainly* assumed to have an income at the minimum wage. Benefits are not there to reward illegal actions. Of course, whether anyone actually brings a case for underpayment is a different matter, but given that HMRC are involved at both ends of the process it’s likely they will smell a rat quite quickly. Only those who are truly self-employed – sole traders – can benefit from this; and since they’re putting everything on the line rather than sheltering behind the comfort of limited liability, don’t you think they should be cut a little slack?

      Fran, you obviously don’t know anything about self-employed people, and you’re clearly writing from a position of envy. Don’t do that. Most self-employed people work their guts out for very little reward because they’ve found a passion and hope that their hard work will be repaid. More often than not, it won’t and they’ll end up going out of business – and since they’re not protected by limited liability, personally bankrupt. And whilst I get a strong sense that you would be quite happy to see anyone with drive and initiative forced to starve, I don’t think it would quite benefit the broader economy – in fact, I can’t think of any idea more calculated to ensure that anyone with any ideas about self-employment leaves the UK in very short order for one of, well, 26 more understanding countries that are immediately accessible. Which will leave the UK as one big happy work camp for the multinationals so lavishly favoured by the current government.

      More generally – this idea will be disastrous. If we are ever to dig ourselves out of the economic mire this country has found itself in, we need to encourage people to take risks that might bring generous rewards, both for them and for society at large. That means encouraging startups – and since startups tend to begin with one person having an idea and needing the confidence that they won’t starve before they see it through, encouraging self-employment. And for other lefties who don’t want to reward rich capitalists – think about it! Employment is an inherently exploitative relationship; you need to eat more than your employer needs you, which gives the employer ALL the power. But self-employment, especially self-employment for motives other than profit, is the ultimate in worker empowerment – not just some nebulous concept of Workers controlling Means Of Production, but *these* worker controlling *their own* means of production.

      In fact, I’d go further – David Cameron says he’s all about co-operatives at the moment? Well, let’s see him put his money where his mouth is, and announce that for tax and benefit purposes all members of a co-operative shall be treated as self-employed – and that this silly, counterproductive proposal is to be abandoned. Otherwise, the only possible conclusion is that Work Camp Britain is *exactly* what Cameron and his City paymasters, none of whom have ever actually started or grown a business themselves, want.

  11. Anna says:

    This is an awful idea. I’m a self employed single mum. The work I do is seasonal so I only earn money in the summer and it is only very minimal then. I work all year (contracted to a company) but only a few hours a week in the mid winter and then up to 50 hour weeks through the summer. I know I don’t get paid much for the hours I put in but I prefer to do something rather than be unemployed and it is work I can fit around being a mum. If this floor comes into effect then I would be forced to stop working. Hardly encouraging!

    • Sue says:

      I became self employed when my husbands working hours changed approx 4 years ago. With irregular shifts of early starts some days and late finishes others varying from week to week it is impossible to be employed around him. Childcare would be complicated to arrange plus not affordable due to his low income. I work during school hours cleaning private houses and holiday lets and I am able to be flexible during school holidays. I declare all my earnings and feel I am working the most I can as a mum to help support my family while being there for my children. The changes really worry me and I think they are totally unfair. I don ‘t know what I am going to do .

      I earn’t more the last financial year but our overall income was down due my husband earning less and this year he has been given a 5pence an hour pay rise which is quite frankly an insult!!

  12. tim says:

    The problem of an assumed floor of income based on the minimum wage, is that many self employment business simply wont earn anywhere near the floor of income imposed

    There are already said to be many people currently receiving working tax credit whose income is very low, yet their hours are above the threshold for tax credits – which for a single person with no children is 30hours per week

    For example someone earning £50 pw net profit but putting in more than 30 hours – say 35hrs, would currently receive Tax Credits, but on an assumed floor of income based on the minimum wage of £6ph or so then their income would be assumed at somewhere around £210 or more than 4 times greater than it was in reality

    I suppose the saving grace could be if someone supposedly earning £210 pw but actually only earning £50pw still received on UC what they would have received on TC then this might work – but however this seems rather unlikely to me, and rather strange for someone to be assumed an income which we know is wrong. How many other benefit entitlement conditions require someone to be assumed an income which we know that are not receiving? Is this not a rather strange way of deciding a claim to Tax or Universal Credit?

    In this situation what such people will be forced to do – is simply sign on to receive Job Seekers Allowance, under-declare the hours worked so as to get below the Job Seekers Allowance threshold of “less than 16 hours”, and be registered as unemployed – which is what I intend to do, if anything so stupid as this becomes law

    This would of course depend on the business concerned, but plenty of internet based businesses where people work from home are impossible for anyone to know how many hours are actually worked

    Personally I think the governments attitude to this is foolish, because it is pain-stakingly obvious, that it is better for someone who would otherwise be long term unemployed, with no hope of any employment at all, to receive Tax or Universal Credit, rather than forcing them to go on to Job Seekers Allowance, where they will remain unemployed essentially until retirement

    The purpose of the policy regarding self employment, where the individuals concerned have no realistic chance of any employment at all, should be to encourage self employment as the only viable long term alternative to unemployment

    I am not sure from the discussion, that people understand that there is a particular class of formerly long term unemployed people who have no realistic alternative to unemployment other than self employment, and for these people, for the government to encourage a life on benefits by viture of the denial of Universal Credit, through the smoke and mirrors of the minimum wage calculation, can only in the end lead to greater cost to the taxpayer as the individuals concerned are thrown onto the “dole”, their businesses forced to close, and all hope of growing income and profits in the future totally lost

    I am sure, if this rule of assumed income becomes law, the result will be that many thousands of self employed people will simply stop working altogether, and the result of the policy will be exactly the reverse of that intended

    The answer to the problem I suggest is to do the same as is done currently with housing benefit – that the previous years accounts are used as an estimate of the current years income, and any over or under payment is adjusted on the following years claim

    In the case of someone just starting a business estimates are used or quarterly/ half yearly accounts are used where appropriate

    This would mean dropping entirely any assumed income and basing a claim solely on the actual income generated

  13. Debbie says:

    i see your point about some self employment never likely to generate the minimum wage, but there is a difference between the self employed and those on job seekers allowance. The latter are required to try and find a job, and get significant help from state appointed agencies if they don’t succeed. While we are not quite at this stage yet, sooner or later the government is going to have to bite the bullet, follow Germany’s lead, and subsidise the unemployed back into work by giving their employers a subsidy, and also require the unemployed workers to take up any work that is offered to them. The self employed are under no such obligation, to either seek work, or to make sure they earn a profit sufficient to give them a living without having to revert to benefits. Neither when they start out nor at any time in the future. Far from it. The current benefit system makes no link, it seems to me, between how much a self employed person works and what profit they achieve/produce from that work.
    Yes, I realise a lot of self employed people would find it hard, maybe near impossible, to get paid work, and many are self employed out of necessity rather than choice. The over 50s brigade who have been redundant may know this feeling. But working for yourself rather than someone else shouldn’t excuse you from having to eventually make a living from that work. Otherwise it just becomes a case of funding someone’s lifestyle until they retire.

  14. Debbie says:

    I certainly don’t agree with the proposal to set the floor according to the number of working hours that the self employed person reports. Everyone would just report the minimum number of hours allowed for what would have been the hourse needed to claim WTC. Is currently 16, but going up to 24 hours per week.

    I would like something like full payment of universal credit for the first year, then a taper using a profit figure of the higher of actual earnings or, say, 16 hours a week at the minimum wage, then, for year 3, 24 hours minimum wage, and thereafter 37.5 hours per week at the minimum wage.

    Where people go into self employment, but are not successful, I would like the free ride for one year to be restricted as a once or twice in a lifetime opportunity. So thereafter, if you went out of self employment and back into it a thrid time, the taper should start at the higher of actual earnings or 24 hours per week @ the minimum wage.

    • Vivien says:

      You have obviously never been self-employed. The self-employed are often very imaginative people who maybe can’t get a job elsewhere or just have what they think is a great idea. If one idea doesn’t work then you’d rather they just stayed on the dole than try something else. Why should you only be allowed to try one thing in a lifetime? How do you know that the person who is denied benefits for a second idea won’t just have found the one that works and makes loads of money? So under your scheme of only allowing one business idea to be tried we would stifle entrepreneurship and do the economy more harm than good. It’s not just child minders or home sewers who are self employed you know. There are many adults trying to make a living in a difficult world. I assume you are lucky enough to have a job. Many people aren’t and are forced to try to earn something by any means possible.

  15. wigmore says:

    I’m in two minds about this assumption. On one hand, I think that it would ensure that the self-employed will be vested in making that work for them. It would ensure that work always pays. However, I think that alot of people have been forced into self-employment in an incredibly tough labour market. We found ourselves in the unfortunate situation where we were both made redundant within a few months of each other. At the time of my redundancy, I was 4 months pregnant and try as I might, I haven’t managed to find work. My husband went self employed a few months ago after months of looking for paid work so that he wasn’t claiming JSA, which is thoroughly depressing after having worked for over 20 years. We couldn’t afford the childcare costs, even with help – not on the £5K pa my husband is earning. To assess him as earning more would only make things tougher. I think that there are many people in this situation and this is an aspect that needs to be thought through carefully if children are not to be driven into poverty and honest people are to be treated with some dignity.

  16. Fran says:

    The self employed should be just that self employed.Why we continue to subsidise them is beyond me. They are self employed for a reason. Nine out of ten it is to avoid tax, why give them money for nothing. They report very low income in order to maximise their entitlements. It’s scandalous!

  17. steve says:

    The problem with this government is that they do not understand the difference between labour work and retail work when it comes to self employment.
    For anyone who does not know, retail requires constant reinvestment of profits. To start a retail business you have 3 options. Take a bank loan, (you would be mad in the environment), borrow off a friend (not many rich friends about) or you start from scratch like I did with £500 and the support of working tax and you grow. You cannot take a wage in the first 5 years or even longer in some cases.
    I just hope people who support the idea do not work in the public sector because you all receive a benefit via income tax. MP’s are the biggest benefit scroungers of the lot. They produce absolutely nothing and people think they are great and for what it’s worth I worked in the private sector for 30 years and paid public sector workers and MP’s a benefit via my income tax. Jack straw today says there is not enough work for MP’s to do, well how about bringing the receivers into Westminster and laying them off.

  18. Alex says:

    For all the comments frothing at the mouth, I don’t think you know about the reality of being self-employed, nor are you facing up to the fact that if your froth becomes policy, the state will be paying out even more!
    WTC has been brilliant for me – I was long-term unemployed but I wanted to be able to work in a particular field. WTC allowed me to start-up in that, because signing on and off every time I got a piece of work was impossible. I’m so glad that I’ve been working. However, work is patchy however much I search for it and develop my business, and it’s been drastically affected by the cuts and will continue to be for a while yet. So I unfortunately rely on WTC to keep me alive, in addition to my earnings.
    If the proposed ‘notional income rules’ are introduced, I’d be faced with having to refuse work, sign on and thus cost the government even more money (JSA is more than WTC). That’s crazy.
    PS the froth about level playing fields is nonsense too – employed people can get WTC and housing benefit, it’s not just the self-employed and unemployed.

    • Ian says:

      Another point worth making is that there simply isn’t enough work in the economy to go around everyone for the minimum hours the government wants everyone to be working under universal credit. That is very much the case now but it was also true before the economy went belly up.

      I think though some posters on here just think (perhaps subconsciously) that it is an utter anathema that anyone (other than the fortunate few who have reached the top of the corporate ladder) should be able to work in a role they enjoy without a passive aggressive boss constantly looking over their shoulder.

      What the government should be doing is looking at why people who are self-employed are needing their income topped up. It may be due in part to a lack of demand in the economy but I think it is more to do with the sales skills needed to bring the work in. That is something many self-employed people (and small companies) lack most but the provision of support in this area, unlike for financial management is non-existent. Many business support services provide free book keeping courses. Why not free sales training as well?

      The complexities of tendering for public sector work also make it nigh on impossible for self employed people to do so. Perhaps that is something the government could address, for example they could expand the job centres into places where self employed people can connect with people who need odd jobs done. However that involves thinking outside the box – something the government isn’t even remotely capable of.

  19. Jaki says:

    As a disabled person on long term sickness benefits, I would (have) loved to have taken the plunge to go self-employed had the system stayed as it is. I can only manage a few hours a week from home (due to long term health problems), doing writing (I make very little money under permitted work) which I have a passion for. Many disabled and long term sick are only able to do restricted work. How is ‘assuming’ a minimum wage going to help me or people like me, whose health is already precarious and who want to make a go of self-employment in the arts (also precarious)? This government are supposed to support enterprise – but all I see is that they’re going to strangle many projects at birth. Nay, before birth. People need a safety net in order to take risks. I cannot believe the bigoted and prejudiced comments from some of the posters who sound like the baying mob from the Daily Mail, hiss boo. Go and attack some real fraudsters ie the greedy bankers, politicians, and chief execs if you must have a witch hunt.

  20. Debbie says:

    Surely the whole point of being self employed is to make a living, not potter along possibly working long hours but generating minimal profits, depending on other taxpayers to keep you afloat?

    Whether the self employment is product or services based, if the self employed aren’t capable of earning the equivalent in profits of the minimum wage for 16 hours a week, or 24 hours once that change to the hours you have to work to be deemed “working” for WTC purposes goes through, then maybe they shouldn’t be self employed and should be on the JSA looking for work instead. It might pay better.

    • sarah says:

      I am one of these self employed Ofsted Registered childminders that seem to be getting peoples backs up – I charge £4 per hour – well below the minimum wage – if I charged any more than that I wouldn’t have any customers and would probably go back to being an UNemployed single parent … at least I’m trying to support my own family as best I can while they’re still at school and I’m providing a service to others and yes I claim WTC to top up my earnings. Is this such a bad thing then?

      • Fran says:

        is that £4 per child. As you know you can take up to six kids at a time. £4 an hour. I don’t think!

        • DenisDenis says:

          Childminders do not get £4 per hour x 6 kids. I have had a stream of childminders through my doors (accountancy) only to realise very shortly how difficult the profession is, and close down once they see what their first year accounts are and how much money they are not making. Only the dedicated who really love the work keep going.

          Childminders rarely take on 6 kids, simply as they do not have the space in their homes and their own kids count towards the number of children they look after, so in reality, if a childminder has 2 kids, they can only take 4. £4 x 4 may sound attractive still, but again, in reality, they do not get children full time. Taking into consideration they are bound by strict legislation as to how many children of a certain age they can have at one time, they will have a mixture of kids of of their kids will be of school and non school age, therefore they are only getting paid for afterschool hours for some. Taking out expenses – mileage if they collect kids from school, meals, drinks, wear and tear to their homes etc, In reality, a childminder is lucky to make minimum wage.

          And in my area, the rates are not £4, they are £2- £2.50 per child per hour, even worse. I would not do it for a pension.

          • Fran says:

            Childminders and nurseries are why our country has the highest level of childcare costs in Europe. Under tax credits the government pay 70% of their wages. If I were a joiner and the government paid 70% of my wage I would increase my price as it’s a guaranteed income. Childcare will just go up in price until the government provide universal childcare in schools and nurseries(government run) and bypass the drain that the generous tax credits system puts on the taxpayer. For childminders and nurseries they can increase their fees tear in and year out as they know they are technically being paid by the government through the parents claiming tax credits. Farsicle

    • Jaki says:

      Oh and how is that helping disabled people, pray? They have a right to work at self-employment, even if they can only manage a few hours a week, or does your hard-faced, hard-nosed attitude extend to us as well? Oh and by the way, don’t come that ‘taxpayers money’ lark – we’re all taxpayers.

    • Simon says:

      Dear Debbie,

      You are exactly right when you say the self employed ” should be on the JSA looking for work instead. It might pay better “.
      It certainly will do soon for many people that currently run a small business.

      The government agrees :

      ” If there are no limitations on the number of hours you can work, the minimum income floor is
      likely to be the equivalent of you working 35 hours per week at the National Minimum Wage
      for your age group. Your Universal Credit payment will reflect this assumed level of earnings
      and so will be less than you would receive if you were unemployed or only working a few
      hours per week. ”

      So looks like it’s official.

      If your business is struggling in the recession, forget the hard work and long hours at less than the minimum wage. Don’t worry if exports of £50,000 only net you £5000 profit this year due to rising costs and the pound falling against the Euro.

      Just jack it in, sign on and look for non existent jobs.

      You’ll be much better off.

      But at the moment, things being what they are, I am sure many people with a small business would be glad of the minimum wage for the hours they work

  21. AP says:

    @ debbie,

    we hear you shouting from the cheap seats and how you would like it to be this and that, tell us, are you a politician – a Conservative one?

    Why not demand the lot and have the UC/TC withdrawn completely, even from the “employed” who receive the minimum wage from all those tight fisted employers, after all “the whole point of being self employed is to make a living”, Extend that to the employed and change your statement to “the whole point of being employed is to make a living”. Yes, exactly, the minimum wage is not enough to make a living and has to be propped up.

    “Where people go into self employment, but are not successful, I would like the free ride for one year to be restricted as a once or twice in a lifetime opportunity.”

    How do you measure success? What free ride are you speaking of, the same free ride that the “employed” get?

    The self employed, like myself, work hard, damn hard, at least as hard as you do, whatever the line of work they are in they have massive barriers, be it from the weather to global economic collapse – almost every business is struggling in one or more ways, it’s incredibly hard out there.

    “But working for yourself rather than someone else shouldn’t excuse you from having to eventually make a living from that work” .

    Are you really suggesting that the self employed don’t want to make a living from their work? more likely they are at their wits end struggling from one day to the next, work often having dried up completely or coming in fits and starts through no fault of their own.

    But hey, that’s our problem isn’t it? after all, folks like you have their ivory towers to keep them warm and dry whilst the rest of us are working twice as hard to stay where we are. The next time you walk down the local Conservative Party cheese and wine evening make sure you don’t tread in the gutter, you might find you have to wipe us from your feet.

  22. Paul Stanway says:

    Here’s my two-penneth…

    In essence, doesn’t this system just screw the poor a little more thoroughly? I thought the National Minimum Wage was introduced to do the precise opposite.

    The current system is silly and needs tidying up. The £5 disregard on Jobseeker’s Allowance is stupid and encourages dishonesty – a couple of years ago the guy who worked in the Jobcentre actually told me not to bother telling them if I earned any self-employed money, because the system just isn’t fair and they’d just take all the money I’d earned apart from the £5 disregard / insult. So I took his advice and committed “fraud”, as the DWP so nicely put it.

    I am now a self employed writer. I claim Working Tax Credits and Housing Benefit but these are sometimes overpaid because my income fluctuates quite a bit. So I pay it back. No problem. I don’t mind because the benefits iron out my income and also it gives me a bit of financial security during difficult times. It’s nice to know that I won’t actually end up starving to death.

    Also, it’s very difficult to work out how many hours I work. Do sleepless nights fretting about what to write for an assignment count as working hours, for example? And do I need to get paid minimum wage for everything that I do? This article, for example. Somebody owes me a fiver.

    I think people find it hard to grasp the idea that I get paid for what I do, not for how long it takes me to do it. Benefit entitlement should be income-based, not time-based.

    This Universal Credit malarkey just seems stupid and overly complex. It’d be much better if they just increased the disregard on Jobseeker’s Allowance, or put in a percentage taper or something to encourage people to take up part-time work. Not hassling people who work part-time would be nice as well.

    That would sort out a lot of problems and it’d be way more simplistic to implement.

    Giving out hardship loans during periods of transition would also help.

    Getting rid of subjectively issued sanctions would be nice as well. It’s very difficult to prove in some instances what you’ve been doing to find work.

    The problem is, people live different lives. They aren’t machines. The best we can do is try to iron out the disparities in the existing benefits system without turning to stupid and potentially disastrous gimmicks. It’s messy, but that’s because society is messy. Trying to fit it all onto a single spreadsheet isn’t going to solve anything.

    • debbie says:

      I stand by what I said. If a person is self employed and not making at least the minimum wage, then maybe they should be packing up shop and joining the PAYE workforce.
      Many self employed people don’t earn the minimum wage. And why is that? Because they don’t have to. If they work for 50p a hour, the government will help itself to other people’s money and top up their income. And that subsidy isn’t to be sneezed at. Have a couple of children and a profit of, say, £5k per annum and your subsidy could be anything from £15k to £20k per annum, tax free, depending on where you live in the country.

      • Lea says:

        Why would that save the benefits system any money? You talk as if no one on PAYE claims extra support! I am low earning self-employed and get the same in HB and tax credits as I would if I worked the same hours in a minimum wage job. In fact, if I was PAYE I would most likely need to claim extra childcare to fit in with set working hours instead of working during school nursery hours and in the evenings from home once the kids are in bed.
        I have a friend who works 22.5hrs a week at above minimum wage and still has to rely on HBand tax credits. Being PAYE is not the cure-all that you’re imagining. Most HB claimants are working!
        My other alternative is to go onto Income Support until my youngest is 5, adding even more to the benefits bill, then re-enter the job market a lot less employable with an extended gap in my employment history. Is it more acceptable for you?
        Many single mums are prevented from taking part time work as they involve shift patterns that don’t fit with registered childcare hours. Not many childminders can take your kids at 6am so that you can clean offices, or will keep them until 8pm sot that you can work in a call centre. There are not enough part time jobs during school hours to go around, so self employed home work can be a way for many mums/dads not to rely totally on benefits. When did it become so wrong to want to something to help yourself a little and rely a bit less on top ups instead of doing nothing at all?

      • Rachel says:

        I agree with Debbie on this and here is why, I have a disability its painful but I push myself daily to work my full time job which is pretty tough going, my previous job was a 40 hour slave in a hotel which I hated, it was torture but I stuck it out for 5 years till I found something else, prior to that I was chained to a desk for 4 years in a call centre depressed stressed and miserable. I like to paint as a hobby, have done for years, as a hobby! I mostly made gifts for family and friends and a few people would see these and ask me to make them things. I would love to quit my job and start a business but I can’t stop my job to do that and that is just life, its shit sometimes but hey. I had a friend until recently, is over 40 years old, has never worked a day in her life, has 5 kids to 5 different men, she just chucks out another one as soon as it gets close to her having to think about working for her living. She sits moaning that the government owe her this and that and claims every benefit known to man, including grants for household items like washing machines, every year or 2 a new machine arrives for free! She gets a crap load of money to live on, but she squanders every penny, is up to her neck in dept to the tone of 25k (how’s that even possible if you never had a job in your life) her house is a stinking dump since she’s either out at friends houses or galavanting in town wasting her benefits on crap, she has her own car and one for her oldest daughter, a caravan which is now destroyed as she’s too lazy to look after it, loads of pets the list is endless to the stuff she wants money on! Money she didn’t earn. Her excuse is that she’s raising the next generation well I’m sorry but her oldest has never worked and never will, the next oldest sits smoking drugs all day with no intention of working either. This person sits and tells me that she started an online store to sell 1 product that she says she makes herself, I asked her to show me what she sells (out of interest as I like making things too) and I was fed a pile of crap about not being able to show me even a sample as she hasn’t been able to get hold of the material she needs to make the item. She has had this store for almost a year, not a single item on it for sale just the name of the store, she doesn’t even have the materials she needs to male the item, the product doesn’t exist at all, but she sits telling me to quit my job and start my business, that its great its easy and I’m just being lazy not trying it myself! There are plenty of disabled people out there myself one day included who deserve the help to do something even if it doesnt earn them a wage it gives a rewarding thing to do and enjoy and feel better and let’s not forget the people who work their ass off to start a business but can’t make it work to pay a living, those people again need help. My point is this, too many people like the woman I know a lazy and abuse the system, they know they can sit on their are saying they work on paperwork and the rest of the running of the business which doesn’t earn actual cash but they can still get full money and swan around telling people who are actually doing work that they run a business bla bla bla! Until these people get off their ass and work hard to make actual business work to the point they can leave work full time etc they should be getting this help, unfortunately like all other wasters like life long junkies and alcoholics like my waste of space mother who abuse the welfare system because they can (as soon as my mother wasn’t getting enough benefits as we all got older she cleaned up got a job and now pretends to be normal like the past never happened and alls forgiven) people will be judged for claiming benefits and will be expected to justify their time and effort to validate their need for help and this help will always be limited. I’m all for helping genuine people who genuinely need it but people expect the hand outs now and they take the piss at every opportunity. Forgot to mention, on top of the caravans cars, private martial arts training classes she has, she has flat screen tellies a damn state of the art multi gym games consoles and gadgets everywhere more clothes and makeup than any one woman needs. Has not worked a day in her life!!

  23. kash says:

    Does the business stock count as saving?
    I sell on ebay and have an income of 15 to 20K and have never claimed mean tested benifits. most of our profit get spent but usually have around 20K items in stock. Does that mean i will not be even eligible to claim universal credit (currently we are able to claim child tax credit)

    • AP says:

      For tax purposes any stock you have left at the end of the current tax year has to be valued at what you bought it for and “carried forward” to the next tax year and you start the new year with that amount as profit. So if you carry forward the 20k then automatically you have “earned” that amount minus what you paid for it e.g. 10k. add that to what you are drawing (use your previous years drawing figures as an example) and you will have a figure you can use as an estimate of your earnings when you apply for the WTC.

      You have to give the actual amount you earned in the previous tax year and an estimation for the current tax year for them to calculate the claim.

      Of course the whole point of this discussion is the amount of hours you work and the HMRC calculating that you earn the minimum wage for the purposes of awarding WTC , even though you might not. The normal self assessment is not affected, it’s being done just so the Govt can save money on giving out WTCs.

  24. Terry Clay says:

    Yes the measure will reduce the payment of tax credits and force those in very low paid self-employment to register as job seekers (starting at £65 a week as opposed to tax credits starging at £45) and they may struggle to find any employment at all.n so for every individual it affects it will cost the government £20 a week MORE

  25. EW says:

    As a lone parent unable to find work, i decided to set up my own business.. currently in my 2nd year i am turning over a profit, however when UC comes in next year, it appears that in order to qualify i will have to earn over £10,000 per year, i.e 35 hours per week at NMW.

    Can anyone tell me how many small businesses run by Lone parents make £10,000 a year from their first year of trading???
    Can anyone tell me how many small businesses full stop, turn over £10,000 from the get go or even the 2nd year???
    Every business has to start somewhere, except from next year an awful lot won’t.

    I and many many others,will have to shut down our businesses and stop working when the UC comes in, end of.
    So much for Enterprise!!!

  26. LH says:

    I was also self employed until this month when the government changed the rules and increased the hours, it now costs the government £40 a week more than when we were on Tax Credits. Bloody idiots, it will cost you more in the long run!!!

  27. Daniel F says:

    I think it will cut out a lot of fraud, i am a housing benefit processor and the amount of self employed taxi drivers working 40 hours a week and declare £50 a week earnings is beyond a joke, however i do feel for the genuine people who are struggling, who will be hit by this i think it is unfair. if your not earning this money then your claim should not be based on this amount.

    • debbie says:

      £50 a week revenue or profit? I am not so surprised by taxi drivers having a low income because they usually have high leasing and maintenance charges for their vehicles, plus their kind of insurance can cost £2,500 a year. So they probably have to turn over at least £500 a week before they earn anything for themselves. Especially private car hire taxis, because the supply way outstrips the demand for that kind of service.

      • Katie says:

        so glad you responded to that debbie, my husband is a taxi driver and has to work a 40 hour week just to pay for the rent of his car from the private hire company – its hard work and long hours just to make a little bit of money from your family! Don’t tar everyone with the same brush Daniel F.

  28. Mr R says:

    Today I had three long conversations with a WTC compliance officer today who couldn’t seem to grasp the concept of how working tax credits work.. full stop!!!

    First telling me my income was a third what I stated (and what has been self assessed) – but then simultaneously advising that my income is what I say it is! She goes on to tell me I am not what they would class as in remunerative work, even though I earn profit of between 5 and and 6000 per year in my 2nd year being self employed… seemingly because that money is earn’t working on average 35-45 hours per week – which according to the new rules will put me below the minimum wage if dividing my income by hours worked..

    Correct me if I’m wrong, but this new system hasn’t been implemented yet?

    As for the way she patronised me about my work – I can’t put into words how passively offensive she was.

    She then seemed to fail to recognise it was a joint claim (with a new-born child as well), which, once pointed out, my partner was all but accused of not doing what she has been doing for the last 3 years, because, in her words ‘oh a lot of people just pay their national Insurance contributions just so they can then go on Maternity Leave’. I mean, what, the??? And this is even with concrete proof of the work that has been done (she has worked as a cleaner through an agency and with private clients for the last 3 years).

    Have they been told to refuse claims by any means necessary or what?

  29. wilfulsprite says:

    The idea of assuming x income after time is flawed, simply because profits vary. Since the recession, my business is taking around 25% of what it was prior to that, yet I am still putting in similiar hours because of the nature of the business.
    For me, the universal credit changes will probably mean having to close my business, rather than hanging in there and hoping for a recovery.

  30. rosanne says:

    Mr R, I hope I’m not too late with this information, but…
    Your compliance officer is definitely jumping the gun in imposing Universal Credit regulations. And even under Universal Credit, making below the minimum wage for 35 hours per week doesn’t DISQUALIFY you – it means that your benefits are conditional.
    There is no lower income threshold in the current WTC system’ the issue is whether work is renumerative and done in expectation of payment. This is stated in the WTC compliance decision-makers manual:
    “Remember, you will not be examining any records to form an opinion of the income the claimant has reported, but to decide whether they support the claim that the claimant is engaged in remunerative work. So you will be looking for patterns of behaviour and indications of an organised, profit seeking approach.”
    The link to the decision-makers manual is: http://www.hmrc.gov.uk/manuals/ccmmanual/CCM6000.htm
    The various sections on self-employment will be most relevant.

    • debbie says:

      I don’t think that’s quite right. As I understand it, if you declare full time hours but earn less than the NMW, for UC purposes you will be deemed to have earned the full time NMW. You still wouldn’t be required to undertake job search obligations or to take a PAYE job; – that ‘s the whole point of the deeming rule, as it, yes, you can work for 50p a week if you want to, but there is a limit to how much other taxpayers will support you in your endeavours, i.e. limited to any benefits you would be entitled to if you were earning the NMW.

      If you declare part time hours, then you would be expected to look for work for the remaining hours, up to full time wages. This is what has self employed people crying foul, because for employed people, the minimum hours worked is 24 hours a week for the household, so they would say if the employed person gets access to the full spectrum of benefits when only working 24 hours a week, why should they be expected to look frr work beyond the 24 hours per week?

  31. DenisDenis says:

    The assumed minimum income is a ridiculous idea. I have clients who, no fault of their own, are not making any money – estate agents, surveyors etc. People in these sectors have been hit hard by the recession, but do not want to ‘sign on’, and are not qualified to apply for anything else. They have spent years building up their businesses and are just keeping things going in the hope that business will eventually pick up. I myself started my accountancy business part-time alongside a full-time job, eventually going full time, but for some years my self-employment made zero profits. Under these proposed rules, I would have been assumed to be making thousands more then I actually was, penalised with an extra income tax & NIC bill alongside the large weekly contributions I was already making under the PAYE scheme, whilst losing what small amount of tax credits I received. Not very encouraging for people starting out in business.

    ps, for those who have a pick on childminders for some reason, childminding is a low paid and thankless job, hence the low profits. The expenses they can put through their accounts are expenses they actually incur when looking after children at home. They are not ripping off anyone, just claiming what they legally spend on their business.

  32. Peter says:

    The complexity of the benefits system certainly needs to end, and the Universal Credit idea sounds good at first. I have had a problem over TCs and renumerative (or not) work as self-employed, in an arts business that was not doing well but I was trying to reboot. Sadly, the world is run by these decision-makers with fixed criteria, but can only change by us arguing our cases. I would support a true Basic Income or Citizen’s Wage scheme, where we all recieve a fixed amount with no criteria, then are genuinely encouraged to do work, business, voluntary stuff etc. The writer a few posts back summed things up well: the JSA is a dispiriting benefit, the £5 disregard a joke that used to be the equivalent of £15 before inflation but is never updated. Job Centres used to be pleasant shop-based places, not the place you sign on & have no wish to return to more than once a fortnight! You can’t have enterprise or a Big Society like this.

  33. Real Life says:

    This assumption that if you’re self employed you must be earning money is interesting. As others have said, in reality this is often not the case – so people will have no incentive to set up businesses that have a long lead in to profitability, or are susceptible to disastrous periods. Take farms or market gardens – with the appalling weather and growing supermarket abuse of monopoly purchasing power (over milk, for example) people have had to work thousands of hours this year without earning anything at all – just to keep their businesses alive. Many depend on tax credits (they still have to pay fuel duty, VAT, council tax etc.) to keep afloat and this gives some sectors of the economy a lifeline to continue productive activity. Under universal credit they will be forced out of business, and that productive activity will cease.

  34. Tracy says:

    Well I’m buggered. If this comes in all the hard work I’ve been putting in to my business in hope of finally earning a living wage will have been for nothing. A life on benefits beckons instead. I want to pay tax! It just takes a few years to make a profit and pay yourself when starting up.

  35. Debbie says:

    You say the assumed income is a ridiculous idea, but you pinpointed exactly why the government are introducing it. You have clients who are estate agents/surveyors etc, who are not earning the NMW in profits, but don’t want to sign on. If they signed on, they would get full benefits but at the same time have a whole lot of obligations, not least being prepared to work at whatever job comes up. Of course they don’t want to sign on! They like the work they are doing. They don’t want to have to work in a factory/for poundland/harvesting because it is the only paid work in their area at the moment. The fact that it no longer pays them a living equivalent to the NMW? Oh well, someone’s got to pay. Let other taxpayers pick up the bill. Is that genuinely your position?

    I’m self employed. I wouldn’t want to sign on, because the jobs currently on offer down at the job centre are for security guards. I could certainly do security guarding, but I would rather not. Say the security guarding on offer was full time at the NMW. Why shouldn’t the government then say to me, on behalf of the other taxpayers from whom I seek a top up, “it’s fine for you to be self employed, and if you are prepared to work for £50 profit a week, go for it. But since there is a job in your area that will pay the NMW, why should we subsidise you for the difference between £50 and the NMW?”

    Just how long do you think someone should be able to run a business without making a living from it, at the expense of other taxpayers? A year? two years? Five years? Or how about forever which is what the current situation is?

    Real Life
    Yes, businesses are susceptible to disastrous periods. I agree with you on this. But they are also free to move into a different line of business, or just save up something in the good times to cover the rainy days. Or go and work for someone else during the slow times. Plenty do. No one is saying people have to earn at least £10k in profit in order to be self employed. Just that, if they choose to be in a business where they don’t earn that much, they can still receive benefits, but no more than someone working fulltime for the NMW would get. Surely it’s a reasonable question that the taxpayer being asked to stump up to support the self employed is asking: if you can’t make at least the minimum wage from your business, why aren’t you making up the difference by working for someone else? Since you are not willing to do that (DenisDenis estate agents and surveyors who don’t want to sign on come to mind) nor accept a job that the Job Centre may find for you, why should I top you up for the difference?

    Self employment is a choice. A self employed person under UC, just like now, is free to close their business at any time, go and sign on and submit themselves to the whims and uncertainties of the “working for someone else if you can get a job” world. Not to mention the obligation to take whatever job the job centre find for you. And they are free to work for £1 a year is they so choose. But surely there is a limit to how much the taxpayer must pay to finance this decision?

    The advice you got on business stock from Ap is completely wrong. The current proposals for UC envisage a cash based business without a balance sheet, so you expense stock when you buy it, as opposed to the matching principle under generally accepted accounting principles, whereby you capitalise stock when you buy it and only expense it when you sell the item, i.e. matching the expense with the revenue. I don’t see the taxman accepting the UC proposed approach. It will be interesting to see how this gets amended for product based businesses. As it stands, if you have stock on hand and make £3k sales this month, but don’t buy any replacement stock, even if you consume £2k worth of stock to do it, under UC you would be treated as having £3k of income rather than the net profit of, say, £1k. The only way to avoid this is to keep your stock levels at the same level as you start wish. So sell £3k but replace the £2k.

    VAT is another part of UC that could be unworkable. Most people do their VAT returns quarterly – so in the months prior to the return, when they are collecting it for the government, UC would regard this as income, and only treat it as an expense in the month you pay it out to the government. I would think VAT will end up having to be excluded for the calculation. How can money collected on behalf of HMRC be regarded as income is beyond me!

  36. tim says:

    The whole point of the Universal Credit is to cut the cost of bureaucracy. Having the income paid automatically by the inland revenue, in the form of a negative income tax, ensures that working always makes people better off and that the poor have an income to live on. Getting rid of masses of made up nonsensical rules, such as the ones being discussed here, is one of the main benefits. See Milton Friedman’s Free to Choose Part 4: From Cradle to Grave. (http://www.youtube.com/watch?v=82SG_EpCsVs)

    The big obstacle to a fair and efficient system is, as always, parasitic state sector employees. Pauling Campbell-Jones types who demand work be made up for them. In the process they get to micromanage people’s lives and business. Crushing the self respect of the downtrodden poor with a stamp of their fat feet.

  37. Terry Clay says:

    Some amplification of the policy and its proposed application
    can be accessed at this link
    See paragraphs 158 and 159ff
    extracted from:

  38. Jo Bloggs says:

    For goodness sake! Why can’t people work for themselves, doing something they enjoy. The only reason other people don’t like it & see it as ‘scrounging’ is because they have to work for someone who treats them with little, or no respect. I am a seriously talented artist but no-one wants to buy art at the moment. I am a single mother of two ( a full-time job in itself) plus I spend every spare second working on my talent. Women’s equality didn’t really work either as it takes two incomes now to earn enough household income, not one! So, I find myself struggling to earn enough for me & my children to live any existence. Plus housework, paperwork, recycling sorting, homework, hair detangling, washing, cooking, packed lunches, hoovering, dusting. etc.etc. Working for about 40hours per week on my art (which, yes, although it may be offensive to some of you, I do enjoy) for very little earnings, I couldn’t actually cope without the help of tax credits & housing benefit. If I have a massive reduction in benefit, I may as well just give up living altogether as I have to say I have worked for some real ‘numpties’ before & refuse to do it again as I can always do a better job than them without being patronising.

    • Debbie says:

      People can work for themselves, doing something they enjoy. And there is no obligation for them to make a living from it. The issue is whether a person who works, but earns less than the full time NMW, (or whatever working hours are required for people who have circumstances which mean they would not have to work full time hours anyway) should be entitled to any support from the taxpayer, and if yes, then what the level of that support should be, given they are not, nor willing to be, subject to conditionality rules.

      You work 40 hours a week but make next to no money. So the choices, if you want to claim benefits are

      1) claim UC, but don’t accept any requirements on you to seek better paid work. The payment will then be based on the higher of your actual net profit or (presumably) however many hours you would have had to work based on your cirucmstances at the NMW.

      2) Claim UC, but accept full conditionality, so that you don’t lose any of your benefits. That will require you to look for work and jump through whatever hoops the DWP want you to in pursuit of that work.

      It’s about time the taxpayer stopped supporting people uncoditionally who can’t make a living from their self employment. They caused this problem of so many people doing insufficiently renumerated work, by incentivising anyone who didn’t want the hassle of dealing with the DWP to go self employed. Thousands of people a year become self employed, 84,000 in the quarter to April 2012 (Source: http://www.telegraph.co.uk/news/uknews/9344366/Self-employment-hits-20-year-high-as-people-try-to-avoid-unemployment-ONS-says.html). I suspect many of them do this not just to escape unemployment but also the conditionality regimethat applies if you claim other income based benefits.

  39. maria carpenter says:

    The world is $42 TRILLION in DEBT…please tell me WHO the world is in debt to? Im pretty sure this welfare “reform” system is really going help sort this little problem out. These systems are designed for no-one but the rich banking cartel that push these “reforms”not your “politicians”…we’re being milked…always have and always will .

  40. dan vincent says:

    I find it amusing when in peoples comments they refer to what tax payers think, everybody is a tax payer one way or another so to comment on what millions of people must think is a joke. I have worked for others, been unemployed, and am now self employed so have experience of it all and it is ok to give employed and unemployed assistance, but not self employed…. totally rediculous, people who earn minimum wage are struggling to survive just as much as people who are unemployed and both are entitled to top ups so how about any self employed people get a top up to give them an income equal to minimum wage for the hrs they are doing and to help reduce fraud everyone had to declare what they spent money on so the tax office would be able to see peoples actual incomes from their claimed incomes, and also the govenment could save tax payers money by either giving themselves a pay cut equal to minimum wage for the hrs they actually work, so couple hrs a day if that then, lol or scrap the exspenses they are entitled too, there is more than enough money in this country to go around so everyone could have a comfortable life, unfortunately it is all in the hands of a very greedy few, stop people abroad coming here claiming benefits and also people from here who go abroad or to prison being able to still claim benefits and that too will save a large wedge of cash, stop bashing the honest child minders they do a very hard job for little reward, I know this cause my mum used to be one, she didnt get rich but the peoples kids she looked after were able to go work which is what is needed people going work paying their taxes for the government to squander…. ooops did I say that outloud… I mean of course to spend it where its needed like their free travel or lavish houses that they dont actually live in, 50% of a footballers income would pay for many people to live on benefits and many other bonus fuelled individuals ie bankers, and top execs who get a milion in bonuses on top of their over inflated incomes they dont pay tax on as well as many celebs, nobody needs a personal income above £70,000 a year so anybody that does should give it up to help the country out or at least 50% of what they get over £70,000 per year, I know some people at the lower end of the spectrum are not helping others in the same boat as them, ive seen many a dole bludger all logoed up with the latest fashion must haves a ciggie always in their mouth a beer can in one hand branded shopping bags in the other, and I do scratch my head wondering how much of my tax pays for them to live so well off, maybe if the uemployed were given food vouchers that could only be spent on food and not booze and fags and all their bills were paid for them by the government(gas,electric,water,rent) not sky tv and such and they were given a few quid to live on that when a job came along that would give them a better life and control over their money they would take it with both hands and do whatever it took to keep said job to not have to go back to being treated like third class citizens, and if criminals were given a punishment that reflected their crime they would keep straight, I mean like public flogging or in the middle east where a shoplifter would lose a finger or hand depending on what they stole, lol so under these terms politicians and bankers would be armless

  41. Michael says:

    I find this new sceme bewildering. Firstly I am employed full-time (40 hours per week) I also earn above the minimum wage, I also receive housing benefits and full working tax credits. In my current situation it will not affect me, however I had been planning on becoming self employed. So that I can work from home and help my wife look after our 2 disabled children, as their disabilities are becoming more troublesome as they get older. Should I become self employed currently I will be earning less and wages would be sparodic, but I would be receiving no extra benefits than if I was earning more in full time employment. In effect I would be taking a personal loss of earnings, with no extra cost to the government or taxpayer. However under the universal credit sceme I will be forced to stay in full time employment and end up getting a private carer, who will be required to have one on one care for a disabled child who needs constant supervision, they will also be required to have some medical knowledge in the event of an emergency and full knowledge of medical notes should an ambulance be required. This will of course be expensive but the government pays for 95% of the fees. So in short rather than taking a personal loss of wages, the taxpayer will be paying for the care, while I make myself money. I will be more financially better off at the cost of what is better for my family, thanks for that!

  42. shellby says:

    How might this effect our household!
    I am employed 25 hours i have asked my boss to increase my hours but there are no available hours?? we have 2 children under 16,
    when my husband lost his job 4yrs ago down to the company going into liquidation etc,etc, he was forced into claiming benefits because after months of looking for work nothing was available, he signed on for jsa but didnt receive any money because of what i earn…. a job was going at a local bus firm term time only, which he applied and got and is still currently there… NOW this is the confusing bit…….. my husband is classed as Self-employed ?? He works for the local company and gets a weekly wage… BUT because the company dont deduct tax and insurance from this wage he is classed as Sub-Contracred-Self employed , we have an accountant at the inland revenue who works this out for us on a yearly basis . when we apply for tax credits it asks for my income off P60, then in the section for self-employed proffit /loss we have to enter 0 because he doesn’t have a profit or a loss, we just disclose his net earnigs as the tax return states. Because his work is Term-time this means he only works for approximatly 38 weeks of the year, thus leaving our household with only my income for the other 14 weeks, we do rely on tax credit as a safety net during these 14 weeks, we have both and still are looking for more full-time work but its easier said than done and with 2 small dependant it is difficult….. so how is universal credits going to help my situation if we dont meet there criteria???

  43. Robin says:

    This will kill my business, you can’t carry over profit and loss from one month to the next, my business cycle is measured in months, some work I do is all unpaid prep for a large event. Tax credits can be based on the year, some months I earn far more than others, but in the others I am spend time and money in preparation. Now the costs of will not be carried over even though they are investments in the future earnings. And the profits, unadjusted to the costs will end my claim, I will then be subject to the full cost of living after having spent my savings to get the earnings (except of course I will have folded and gone on JSA, realizing that it will never work).

    How can universal credits support any business if it can’t allow you to have business cycle? It can’t, It just can’t.

    • Darren says:

      Exactly – much of what I do is UNPAID because it is a marketing acitivity in the absence of an advertising budget. What happens when I prospect 50 people in a week and make no sales? How are the hours and travel expenses worked out? This is truly ridiculous.

  44. Miop says:

    I am closing my business due to this – I have to do a lot of work as it’s an internet sales business, but I hardly earn anything since the recession – It’s about the same as a part-time cleaning job, but with many more hours worked, so if they assume I am earning for the number of hours I am working, I will lose too much money for it to be worth carrying on.
    One of the benefits of working for yourself, is that you don’t have to pay yourself minimum wage – the government is very short-sighted. Another person will be hitting the dole queue thanks to their rules.

    • Debbie says:

      That is probably what a lot of self employed people will conclude. People who, for whatever reason, can’t make a go of their businesses, where “a go” is defined as having profits equal to at least the full time NMW, may well be better off chucking it in and going on the dole.

  45. Mark1957 says:

    I am self-employed, but don’t earn the minimum wage, with tax credits I just about get by. Under the new rules I will be thrown out of self-employment onto the dole, where i will need 3-4 times as much benefits. It does not make sense, I thought by working I was doing right, ok I needed a little help, but now IDS seems determined to pull the financial rug from under the feet of people like me. I really fear for the future and have considered topping myself more than once.

  46. joe bloggs says:

    We are all doomed.

  47. Debbie says:

    Why do self employed people, those who are moaning they will have to close up shop, think they should be entitled to unconditional support from the taxpayer forever? Is self employment such a sacred cow that we should be able to claim maximum benefits just because yes we work, but due to whatever excuse we could only earn 50p an hour instead of enough to live off, so heigh ho, someone else has to pay?

    • Tracy says:

      I am a self employed freelance market researcher. In the current recession I have seen my income reduce year after year, the gaps inbetween work become longer and longer, and the remuneration that Market Research companies pay freelancers go back to what is was 7 years ago. When I do have work I sometimes have to work up to 70 hours a week just to earn what I would do working 40 hrs a week on minimum wage. Inbetween projects I spend my time contacting Market Research companies looking for work and touting for business. HOW DARE YOU PRESUME THAT ALL SELF EMPLOYED PEOPLE ARE A BUNCH OF FREELOADERS WITHOUT HAVING ANY EXPERIENCE OF BEING SELF EMPLOYED YOURSELF.

      • Debbie says:

        Yes, in between projects you look for work. You want to be a freelance market researcher, fair enough. But, according to your own post, you suffer downtime inbetween projects. So why should that excuse you from not having to also of another line of work so that overall you have sufficient to support yourself? As to not having any experience of self employment, how presumptious. I am self employed and have been for years.

        • Charlotte says:

          Yeah guys. Shut down your businesses and join JSA… so I have even more people to compete with.

          At least Debbie’s business can have less competition.
          Then she can earn more from more customers looking for businesses like hers – where there are now fewer providers.

          Then she can pay more tax.
          Then she can pay for us to hound her with job applications for the job positions she won’t be able to provide us all with.

          Not that I believe I am entitled to a job. Especially not after noticing the huge discrepancy between what teachers told me as I child that I could do when I was older and what apparently seems to be available/realistic now. There were a few good times when they tried to encourage entrepreneurship.

          Although, after gaining 6 A’s and 5 A*’s at GCSE, completing a degree, volunteering in a charity shop, getting involved with new technology, trying to learn the actual grit of starting a business, volunteering in various start ups, and repeatedly getting good feedback from job interviewers but alas, no job, I’m sure you can imagine how perplexed I am.

          What is with all of these people wanting me to work for them for free, and yet, not being able nor willing to pay me for my time? Why are people wanting me to promise to come and work when they call without promising to call at all (zero hours contracts?! What the devil).

          How am I supposed to learn how to run a business if the business fails, and I find I am not allowed to try starting another unless I want to run it homeless from under a bridge?
          There is the old phrase, “Don’t quit your day-job!” But what if no one can give me an adequate day job?

          Perhaps it’s my own fault for deciding early on as a child that I wouldn’t make a good doctor because puking into patients during surgery would probably not be good for the patient.

          Or perhaps the world I have become an adult in is different from the one my teachers thought they were preparing me for. The tree used to be a good metaphor; a nice way to think about things – but after technological advances and the internet, a web seems to be a better analogy. Life is messier now. Goodbye order, hello chaos.

          I heard about the Universal Basic Income. Imagine that!
          Air for breathing is free. Water for drinking became free. Imagine if no one had
          to worry about basic nutrition or shelter either – how to acquire and keep the very basics of human physical necessity no longer burdens the mind. Imagine!

    • Jaki says:


      Seeing as you completely ignored my comment about disabled people I will repeat it for you here.

      Disabled people have a right to work at self-employment, even if they can only manage a few hours a week, or does your hard-faced, hard-nosed attitude extend to us as well?

      I see you also quote from the Torygraph. Try reading The Guardian, The New Statesman, Think Left or any other publication that gives you the other side instead of the Right Wing Party Line. Sick and disabled people are dying at a rate of 73 a week because of benefit cuts. Open your eyes. Did you not see Michael Meacher’s speech in the house the other day and the backbenchers including even some Tories who read out the horrors and atrocities that are happening as a result of Atos who are paid millions to carry out the DWP’s pernicious policies?

      • Debbie says:

        I may not agree with this, but the direction we are going in as a society, with Cameron and his merry band of followers leading the charge, is just because someone has some kind of impairment doesn’t excuse them from having to support themselves. Yes, it isn’t their fault, but it is also not the other taxpayers fault, and those other taxpayers should not have to suffer a drain on their funds for life just because the disabled person uses their disability as an excuse not to work sufficiently successfully to support themselves.

        How am I so sure of this? Because of the government’s mad rush to transfer every disabled man and his dog onto ESA, with their henchmen enforcers ATOS marching jackboot style behind them, regardless of whether expecting disabled people to work in a society so prejudiced against disability is likely to have any positive outcomes.

        Disabled people may well have a right to work, but it seems to me, under the current government, that the current message is that disabled people don’t have the right to be disabled.

    • I think a lot of businesses are worthwhile, useful and viable and yet are still subject to external fluctuations – like rain or drought affecting farmers, the recession affecting shops, etc. I wouldn’t want to give up on businesses too quickly – we may need them. Similarly learning of new skills, gaining experience, developing businesses, all takes time. If the people who are presently running a low-income business give up, they will then be unemployed. Then they’ll get full Universal Credit. If they carry on in their business, they could still have full (but potentially reducing) UC, but they will be contributing a service, or maybe building or maintaining their skills and infrastructure for when things pick up – either when a new business becomes self-sufficient, or when external factors (for which the self-employed person is not themselves responsible). I can’t see that having someone unemployed spending their time applying for jobs they’ll never get, or working free for one of the workfare companies, is preferable to them working on their own business. That isn’t to say that people with right wing views won’t want to simply punish people for not being capitalist winners, but if we really are talking about practical solutions and fairness, it’s got to be better to have people self-employed than unemployed. If we ever get to full employment, then we could re-think. But at the moment I’d rather see the jobs kept for people who really want them, not by people who were forced to give up happy self-employment.

  48. Anon gardener says:

    As a self-employed gardener of a few years my business is pretty seasonal – ie. 9 months of the year are ok, 3 months not very good though not completely dead. I’m pretty horrified about what UC will mean for me.

    1. The insane income rules (which will assume that I earn more than I actually do in winter) will penalise me in winter and reduce my income at a time when I actually need it most.

    2. The proposed monthly reporting will be very burdensome and time consuming, but more importantly takes absolutely no account of the business cycle – profits are often made on the back of previous investments but in many months this expense will not be accounted for. Yearly calculations as now are better – a realistic profit can be arrived at over the cycle. Don’t the Tories understand how small business works?

    3. Increased conditionality is pretty worrying for seasonal businesses such as mine. Will I be asked to look for work in my quiet three months because I’m not doing the hours required? Not very realistic in terms of today’s job market and never mind the fact that I do actually still serve three or four clients through much of the winter when weather allows. Should I let them down to go and work in McDonalds maybe? Great PR for my business that.

    4. With the UC savings rule starting at £6000 and culminating in total ineligibility at £16,000, the incentive to save, even for investments such as vehicles, is being totally destroyed. I think that £12,000 saved will result in £24 a week being withdrawn, so it’d probably be better to get a cheap loan and pay £1000 in interest for my next van. Great of the Government to encourage borrowing rather than saving eh?

    I can’t help thinking that many many small businesses of many different types will be hit disastrously by UC. I will certainly struggle more but will carry on as I love the job and, yes, I hated traditional employment despite being a hard worker. Any seasonal business or businesses just struggling to get through to the economic upturn will suffer badly due to the income floor..

    UC is going to be this Government’s poll tax – if it comes in as planned they will be toast at the next election. Let’s just hope it’s in time to stop much of this cold-hearted insanity!

  49. Elkart51 says:

    Strange, two years ago I was bribed, bullied, lied to, and basically badgered into going self employed. They asked what I could do and I gave them a list of work I had done.I also said I was an artist/illustrator. So they said do that. Now there were no questions about my ability to do that, no checks absolutely nothing. They gave me a form and it listed what WTC I could expect which was £15 more than JSA. What they didnt say although the letter they gave me said I could get. Was no dental treatment, no prescriptions. in fact there were 9 different benefits that they said i would get that I didnt. In fact I was £20 worse off . Plus I worked 60 hours a week trying to get business in. Because I was internet based I was also funding that. I didnt make any money in the first year. In fact I made a £700 loss.That came out of my small pension I was getting. A lot of people were treated as I was. Now I had no experience of running any business. I knew plenty of people running businesses on the side before going officially self employed. of course they had the work lined up. The people dumped into the self employed section were running blind and having to get that work. 2 years on and I am still running at a loss. Even though I am getting a customer base together. When Universal credit does come in, I will be forced to throw all that work away because I won’t reach their criteria. I sell my designs all over the world but as I work on commission unless a big order comes in I still struggle.So at 62 years old I will be back searching for work that isn’t out there, being called a scrounger again. I have worked damn hard all my life yet still get treated like some lazy git who never worked a day in their lives.

    • Debbie says:

      Who says you can’t get free dental, etc if you are low income self employed? of course you can. You just need to get an NHS exemption card. Getting WTC qualifies you for this.

  50. Lilly says:

    I dread to think of what it will mean for me as a lone parent and a self employed person. I now work as an independent healthcare practitioner – and though the rate per hour I can earn is high – I am starting out and working few hours ( we are all struggling) and am at a loss and have low income anyway. Right now I get tax credits that include business building time – but even at my higher per hour rate (when I get a client), I wouldn’t come anywhere near making minimum wage for the hours I actually work (which are significantly less than I claim for tax credits – I could claim more but I don’t because I want to make it on my own if I can at all – the opposite of the typical Torygraph benefit collector). (And yes I have tried to apply for other work, more simple jobs, to make up time and to make my hours during my son’s school hours worth something more – and nobody will hire me because I’ve got three degrees and am a healthcare provider and they know the minute I get something else I’ll stop stocking shelves and what not – and they are right. I’m a loyal person but I have to feed my son. I envision that I’ll be in a situation where I will have to give up a client (losing £50) to go short notice to some interview for a shelf stacking job I’ll never get, and make it all that much more impossible.

  51. johanna thomson says:

    I would love to be PAYE. I hate being self-employed, keeping receipts and fretting about my tax bill. But I have no choice. I approached my employer and asked if I could be on the books but they preferred me to be freelance so accommodate fluctuations in work. So it is actually not a choice. There are also no jobs in my area that fit into the archaic school run timetable.

    To have a sum plopped into my account each month regardless… priceless!

  52. Alan W says:

    What an absolute nightmare. I forsee nothing but trauma ahead for so many hard working people. Britain is becoming nothing more than a workhouse for the benefit of the elite.

    Once again, the rich have the ability to continue getting richer and the poor.. well, you know the rest…

  53. Debbie says:

    Im not panicking…with so many problems this will cause I do not believe it will be brought in. They can’t even deal with what they’ve got now (tax credits) let alone monthly accounts. It’s going to be a disaster. I’ve seen my accountant and I will be an employee of my own company so I am employed!!

  54. Elle says:

    Well to be honest I’m wishing I had not bothered doing anything with my life and sat on the dole right now – and thats what I will more than likely end up doing when this comes in.
    Unfortunately I caught on birth control with my daughter and found out when it was too late to do anything other than contine with the pregnancy. I found the benefits system a great help in order to finish off college – which I did and I then went into working.
    After putting my life on hold and just working to support my family I decided to go to uni to gain a career (unfortunatley the fees have almost trippled and I am getting in a load of debt to ultimately pay more to the taxman in the end).
    As student loans are not enough to support a family on I have shelled out on extra courses in beauty therapies and I’m self employed doing them around uni work and raising a family – the fact that I dont yet drive has a huge impact upon the profit I make – currently not NMW once I have paid out the taxi fares to get there and back – along with the fact I am having to pay someone to sit at home with the children while I work on an evening (which I cannot get help towards the cost of and doesnt come off the ‘profit’).
    I was hoping to pay for a fast track driving test and a small run around car from my next student loan payment (as it would benefit me in the long run been able to work further afield and serve more clients thus getting a higher, regular income). However I am now left wondering if I would infact be better off not bothering and not returning next year to uni (avoiding further debt) and just going on the dole!
    I really hope this doesnt come in as there are times I cannot work (school holidays or study weeks where I have to prep for exams).
    I currently survive off next to no sleep and have several health issues that have come about by this.
    Plese tell me what is the point in trying to better yourself and set an example to your children?
    I am very ashamed to say I voted conservatives at the last election – it is something I will never do again.
    By the way the law is just as bad as politics.
    Oh and more importantly – by taking more and more from people they are making less money available for people to spend – I guess they do not actually want the economy to recover. Basic common sense says that IF people had a decent income at all levels the economy could pick up. I CAN SEE A HUGE DISASTER IN THE MAKING HERE!

  55. Eva says:

    My brother is a self employed gardener, who has used tax credits for years to subsidise his part-time business. Whilst the rest of us are working 5 days a week (with no prop), he is swanning around the countryside on his mountain bike, playing computer games all day and living the life of a King courtesy of the tax credit`s system. Yet he has the audacity to say to me that he cannot understand why my husband sends me out to work, because he (my brother) likes to pays for his wife to stay at home!!!! It`s time lazy self employed people got off their bottoms and worked like the rest of us.

    • Darren says:

      I am self employed and I am NOT lazy. I hope your statements do not form blanket opinions of those who work. I work all day every day. I have a games console but it is packed away in a box, thank you very much.

    • Mark Windmil says:

      I am a self-employed gardener, and work pretty hard at age 55. The work suits me: I have had some serious episodes of depression earlier in my life, and all the physical work and social contact I do now keeps me sane.

      I make just about £10, 000 (approx full-time minimum wage) BEFORE expenses. But UC will mean I effectively cannot claim any expenses, because I will be deemed to have £10,000 profit. In reality, profit is nearer £8,000 because I need to use a car and tools and equipment, and pay for
      supplies and repairs.

      Charge more, say the moralists – but my pensioner customers cannot afford more. Having a decent garden, not an overgrown one helps older people’s quality of life and even (a bit) helps them stay in their homes rather then go into expensive sheltered/care homes. So I guess I will stay loyal to my old ladies and swallow the cost of expenses myself and lose UC. Better than stacking shelves while claiming UC to subsidise low wages for some crappy company.

      The mad thing is, if I give up the gardening and get a minimum wage job I will get more benefit than continuing self-employed.

      • Jedi says:

        Nope… you will be required to top up hours with extra work… looking for that extra work as fi you are a jobseeker… same sort of rules… conditionality.

        Will be able to carry on Gardening… Barbara Windsor comes to mind LOL!

    • Jedi says:

      Your comment is moronic in its sweeping generalisation.

      Please develop a brain before posting again.

  56. mr q says:

    im a self employed taxi driver,and according to the UC calculator I will be much better off,due to being eligable for HB,which I never realized I was entitled to.
    so roll on UC.

  57. Mike says:

    Self employment represents the only realistic chance of getting ANY employment for millions of people. It is obvious from reading the posts above most will not make even the minimum wage for the first couple of years at least.
    If only the government would see what a massive impact on the economy supporting these people would have though a genuinely helpful benefits regime.
    Either they support them paying them increasingly less benefits over time & eventually see them become net tax payers, contributors OR through lack of vision they bring in a punitive & short sighted scheme as is proposed ,well in that case all of this drive & initiative will be wasted, they can sit idle waiting for a ever receeding retirement age to be reached.
    What a waste of people, what a waste of an excellent opportunity to rejuvenate the economy. What a lack of vision, pay a lower benefit for a couple of years then recoup it in tax many times over OR pay full benefit until death ?
    It’s a no brainer.

  58. Rob says:

    I am old enough to be getting part pension guarantee credit and part working tax credits as self employed to bring me up to the pension minimum income level, although I am a male under 65. It looks like I will lose the working tax credits as my self-employment is a long-term research project that will not pay anything until it is finished. Would it better for me to dump the research and declare myself retired? Would I then get full pension guarantee credit to replace the working tax credit if I did so?
    Good advice welcome.

    • Jedi says:

      Nothing stopping you researching while retired and then becoming un-retired etc. surely?

      But with regard to the WTC… looks like when you are switched over you will get six months without conditions i.e. having to look for work as if you were on jobseekers.

  59. Les says:

    Debbie, “sooner or later the government is going to have to bite the bullet, follow Germany’s lead, and subsidise the unemployed back into work by giving their employers a subsidy,”

    It’s already being done. It’s called working tax credit and it’s a subsidy for businesses who want to pay an unrealistically low minimum wage.

    Raise the minimum wage (ie reduce this wage subsidy to Tesco’s etc) and the issue of an unsustainable welfare bill largely goes away.

    Yes in the short term some businesses will struggle and lay people off but does the UK really want to subsidise it’s private enterprises with the public purse.

  60. Yvonne says:

    I’m confused by it all. My husband and I are both self employed in start up businesses and doing quite well. However, with the minimum income floor it’s looks like they will assume we earn more than £16k making us not eligible to claim anything at all even though our income is actually only around £10k at the moment?

    • Jedi says:

      Unless you have children of a certain age in which case there will be concessions in hours they expect you to work, they will expect self-employment to be 35 hours per week at minimum wage for each of you.

      If that is not the case then you will be expected to look for extra work.

      Specifics are lacking currently though.

      Perhaps Osborne will scrap it if it becomes the train wreck people are expecting.

      To my mind it is a social disaster waiting to happen right at the time when self-employment needs to make up for a diminishing labour market.

      Nasty party won’t ver get my vote again.

  61. Robert Davies says:

    What I am not clear about with regard to the minimum income floor for self-employed claimants under Universal Credit, is how this requirement is affected by the position of one’s partner in a joint claim? I’ve recently been made redundant and am setting myself up as self employed. In the short term, there is no way I will earn the minimum wage based on a 35-hour week. However, my wife earns £11,000 a year on a part-time salary. If her earnings put our joint claim above the minimum income floor, is it relevant that I may earn nowhere that as self employed? Will my income still be deemed to be a full-time minimum wage and if so, what effect will that have on our claim? I’m totally confused!

    • Your joint earnings need to meet your joint earning thresholds (the sum of your individual thresholds). This will normally be 35 hours x minimum wage but if you’ve got kids it could be 16 (for one of you I thnk). I don’t think £11,000 will be quite enough for one, let alone two.

      If not, it will apply but Reg.62(3)(b) says “the minimum income floor is to be reduced so that the amount of the couple’s earned income does not exceed the maximum for a couple.”

      That is, unless you’re spending less than half your time working on your business in which case the MIF doesn’t apply but you won’t count as ‘gainfully self-employed’ and will subject to work related requirements (as will your wife if she’s only part time).

      Wel, that’s my take on it, anyway!

      • Robert Davies says:


        Thanks a lot for your reply – that makes sense. New system seems to leave self-employed people below the minimum income floor in a kind of catch-22 – not great, really. Thanks anyway for the explanation.

  62. Martin Johnson says:

    I would have read all the comments above but I have a business to run.

    How does the Universal Credit system work should you work on a commission basis only…you could work 50 hours per week and at the end of it not earn a penny.

    If your income levels are high and then low and then non existent – what then?

    • PermaHeretic says:

      As regards not making a penny, firstly there would be the question of whether you were ‘gainfully self employed’ at all. If you were, then the Minimum Income Floor would apply.

      The fluctuating income would be assessed on a monthly basis, therefore sometimes you would make money and receive less UC, and sometimes you’d not make money (but they would treat you as if you had earned minimum wage. There is no carying forward profits or losses.

      Sounds mad? It is.

      I know it’s time consuming to read the comments, but I do recommend you read my blog post http://www.permaculturehouseintotnes.co.uk/1/post/2013/03/universal-credit-and-the-self-employed.html. It’s quite readable..

      Better still, download my free briefing paper – and use it to write to your MP.

      I’m also happy to discuss specifics – as best I can – via the Universal Credit and the Self Employed Facebook page.

      I don’t think David will mind me plugging these – he has a link to my blog post at the beginning of this article.


  63. Tony says:

    I’ve been a sole trader for 23 years, and I guess I’m one of those to be weeded out by Universal Credit.

    Retired on health grounds all those years ago – and determined to not be a drain on the tax payer, and wishing to do something productive and hold my head up in society etc. I started a craft type business. Gradually for reasons of health and despite my best efforts, my turnover suffered to the point of turning in a loss – this was not the result of creative accounting, but due to the abismal turnover.

    I tried for ESA (the old Incapacity Benefit) – what a nightmare! I was awarded 6 points, but needed 15 to qualify – so it was back to working for nothing – yes, nothing. I do have an occupational pension, nowhere near enough to live on. This is counted as my earnings, which is fair enough, Working Tax Credit tops this up. I’m in an occupation noted for its low earning power. On top of this I can only work very steadily. Each job can take up to three month to complete, before I recieve my pittance.

    I’ve joked in the past, that if I earned the minimum wage – I’d be in clover!

    Over the last ten years of being on this slippery slope, I’ve got rid of the car, television, scrimp and save in ways which are harldly thought of being acceptable in a civilised society – but I was content with my lot………now I don’t know what’s going to happen.


  64. Kieran says:

    I was just tinkering with an idea I came up with for a currency called a Universal Human Credit [“because my time is the same as your time”] and put that into a search engine and found this. What a heads up.

    Funnily enough, I was recently thinking about what would happen if the WTC scheme was ended – what a major headache that would cause for so many people, like me, who have fought to keep afloat. I have sold most of my belongings [mainly my prized record collection] to keep going over these last few years, and currently live in a caravan with no running water [which does constitue ‘adequate housing’ btw, I recently discovered].

    Receiving the WTC over the last year has made such a difference. I never knew it even existed till a year ago.

    As I see it, what seems to be happening is a grand reckoning, where the corporation of UKPLC [masquerading as a country which used to be called Great Britain, including a place called England] is conducting a ‘stock check’ census on all self employed individuals. They wanna shake em all out, the blasted scroungers!

    While I concede the paradox of being self employed and also effectively receiving ‘benefits’ [which is what led me to conclude that this situation would not last forever, so this comes as no surprise] – I would never have had to claim this sort of thing had my business not failed – ENTIRELY due to the management of the ‘economy’ and banking system by flooding the country with cheap credit [pump and dump housing bubble etc and crash], as well as an enormous and utterly extreme and ongoing influx of unbeleivably cheap and totally unregulated labour followed by the purposeful reduction of issuance of loans, ensuring music stopping and a whacking ongoing depression.

    Anyone who has ever sold online knows that the money is finally running out – everywhwere. I used to be a decorator. There has been no decorating ‘market’ since 2007/8. Nor any market in anything else, apart from propping up insane ideas like the current banking model [money issued as debt, instead of credit. See Positive Money dot org] – or a few horrific mercenary wars here and there with the really clever model of public expenditure, private gain.

    We have been running on fumes. Well, I have anyway.

    So, what I see happening is the government will be rummaging around and micro examining every aspect of your ‘business’ – which might not really be a ‘business’ anymore, but an attempt, at all costs, to keep self employed status and to avoid the death spiral and crushing depression of signing on – anything to avoid that feeling where you start wishing that you worked in the jobcentre, so you can have a job pretending that there are jobs to people who know that there are none.

    Akin to the Enterprise Allowance, that Thatcherite massaging of the unemployment figures, the WTC has served a very similar purpose.
    And now, as it ends, it will roll up all the stragglers and absolutely ruin them, just when they needed help the most.

    I will now be able to plan what to do over these next months, so I thank you for the advance warning.

    At least I am single, and theoretically able to leave the country, which is what I will be looking to do.
    Not because I’m protesting the loss of ‘benefit’ but because once they start with this, there will be no going back to being ‘left alone’ – which is the main attraction with being self employed, despite the continuous stress of the rollercoaster ride of never having enough money, and not knowing what will happen from week to week.
    Being dirt poor in rip-off Britain is okay, if you’re left alone.
    Being dirt poor and having to dance a little dance every month for government employees who have never actually generated a penny in their lives for themselves other than a monthly payroll wage [if you are not self employed, that is how I see you btw], well, I’d rather boil my head.

    I can guarantee that this is the thin end of a big old nosy wedge.

  65. Anon says:

    I currently get wtc. I am a self employed performer and I also have a casual job which I do from home. This casual job gives me just less than my rent and the wtc pays for my council tax, electric and a little bit of food. I also have another non performing job which I do as self employed for on average another two days a week. (I am also entitled to a v small amount of housing benefit but my local council is so disorganised and I am fed up of chasing them.) None of it pays loads, otherwise I wouldn’t be entitled to wtc, but I certainly wouldn’t want to be forced to look for other non performing work and forced to miss auditions because ids and dwp want to force me to take up some awful job in pound land. My current casual jobs allow me to take time off to go for auditions..and as a performer I have to pay so much out so my profits usually end up as a loss, but I work extremely hard without a day off and even during lunch breaks in my casual jobs, I am searching for castings/auditions and typing letters up. Many performers jobs (unless they’re famous) can last a max of a week at a time and they are few and far between. This is no reflection on talent or how hard someone works, it is due to simply there being a lack of work, as most artists/ performers will say.This government just want to dumb the population down so we can all earn a pittance, with no rights while their greedy millionaire mates profit immensely.

    • Debbie says:

      But why should the taxpayer be expected to fund your ambitions, especially as you don’t seem able to earn the equivalent of the FT NMW for your work?

      Benefits when you are self employed are a double edged sword. Maybe restricting them via the minimum income floor is not a bad idea. At least then the self employed, just like their NMW earning (or near enough to that makes no difference) brethren in places like Tesco and Asda, will have no excuse but to make sufficient effort to bring their incomes up to the NMW.

      A couple of market traders who currently work 3 days a week – which works out around 30 hours a week, by the time you include stuff like loading and unloading the van, plus getting to and from the market, – and make around £7k profit a year, were complaining to me that the minimum income floor could mean they have to work an extra day or two a week AND that they would have to invest more than they want to in their stock, just to get their profit up to around £20k a year for the two of them.

      Is that such a bad thing? At the moment, the very generous benefits they get – all their rent paid, WTC for both and financial support from the state for their 3 school age children – means that they don’t have to pay the sacrifices of working full time, nor of investing more in their business.

      Is that what we really want? A nation of self employed people, all with state permission to dabble in their businesses whilst depending on the taxpayer form their main incomes?

  66. jennifer h says:

    me and my partner have 2 children one of whome has a disibilty i also have a didibility but i recieve the lower part of both mob and care which means although i recieve extra money each month it actually does not play a part in any benefits i recieve. my sons disibilty however does. although we dont have to work and earn a living i eventually want to run a burger van and my partner is working on becoming self employed with his brother . put mine to one side for now i want to know if my partner can claim self employment in buying and selling appliances he wont be making much but after travel expenses buying the appliances fixing them if they are broke cleaning them advertisement etc…. then splitting any profits with his brother but obviously he wont be taking no profits for at least a year because every penny will need to be put back into the buisiness to buy and sell until they have a hefty amount that they can both take something home from. i want to know how this would work can it be done and can they claim as working as brothers sharing there self employment thankyou so much

  67. AlisonLeigh says:

    I have various health problems an am waiting for an operation, but was found fit for work by ATOS, like so many people are…so then had to sign on to jobseekers allowance and apply for jobs.
    Because of my health issues they told me to apply for part time work, which I’ve been doing.. with no success.
    I’ve been shortisted and attended interviews but never seem to be the person they want- this has basically been the story of my life, and have had even worse luck in the last 5 years so have big gaps after my last proper job(which was 5 years ago) my better jobs are the older ones and the more recent ones are ‘desperation’ jobs, so my recent work history is a mishmash of part time and casual roles, all menial, working as an unpaid volunteer, signing on, and being signed off for several periods of severe illness…
    making it difficult to put a decent looking CV together and actually get a decent permanent job anywhere!
    As we know these days one is practically expected to have a degree plus 10yrs exp and spend an entire day filling out 6 page application forms to apply for any basic menial little part time role, plus display a driving ‘passion’ for it, even if it’s cleaning offices or stacking shelves(!!) which i find really difficult, being a crap liar.

    At this point I’m under threat of being sent on the ‘work programme’ which frankly gives me panic attacks because of what I’ve read and been told by others who have been subject to it..

    So although I am still ill and often get no sleep during the night due to pain I’m supposed to be signing off this week to be self employed for 30 hours a week (which I’m not at all fit for at the moment) in order to recieve WTC.
    In order to have enough work I have been trying to get a 3 day per week part time job elsewhere to go with my self employed work- which realistically will not fill 30 hours a week or make a good enough income to be a full time job.
    I am really not sure what i’m supposed to do as I’ve been steadily rejected by every employer.

    the jobcentre is pushing me towards signing off now, as they will want to refer me to the work programme if I don’t sign off immediately.
    I would also need housing benefit in order to pay rent and applying for this is apparently very complicated if you’re self employed. without it I would be homeless, and the delays with all of these things are so long that months can go by without any payment. If you don’t have savings to cover everything during the delays it’s absolutely nerve wracking.

    As I’m still waiting for an operation I’m forced to lie by omission to any prospective employer about my health, and even then they don’t want me!
    If I was actually employed there would be times when I’d be a zombie from no sleep and strong painkillers, I get physically exhausted easily and so can’t sustain physical work for a whole day so that restricts what I can even apply for, I fear not being able to even be good at a job in this state.
    Plus I would just have to leave at short notice when the operation does come up, as I would need to be signed off for 6 weeks apparently.
    As far as I’m concerned I would be better to be signed off until post op, I really want to work part time but am not fit for fulltime work with the symptoms, and the aftereffects of them. With WTC there seems to be no inbetween, unless you have children(I do not)

    So I am thinking of trying to claim it and work 16 hours a week under the ‘disability or longterm illness’ criteria but can’t find out any info on how I would actually prove this to HMRC- would a doctor’s letter be sufficient? does anyone know about this criteria and how it works?

    I’d much rather be working than signing on, even if it is just part time surely it’s better than nothing!

    I live in absolute terror of becoming homeless because of this system, and if that happens I just don’t want to live anymore.
    I feel completely exhausted by the constant stress and worry, as well as being in pain.
    I am going to have to do this very soon so am absolutely freaking out right now…and reading about Universal credit frankly makes me feel even more hopeless. If anyone here knows about the rules for WTC ‘illness and disability’ criteria please let me know, as managing to work part time would actually be manageable and make things a lot easier until I’ve been operated on.
    Thank you. A

  68. Answer,
    Send al the immigrants home, stop sending billions aboard in foreign aid, & stop fighting wars in other countries.
    Perhaps then, we would have more money for our welfare system, & a bursting NHS.

    Oh & tax the Bankers more for messing up our country, Robb*** SODS

  69. T- Jay says:

    A call for “Sending immigrants away” is exactly what the Government wants the MASS Brits to start chanting keeping the Mass busy fighting with non-Brits. Then it turns out to be another ball game Oh the foreigners have taken our Jobs. Then this turns out to be a Race rows on Africans, then with Muslims and the media will fuel this hate campaign. Typical BRIT will just follow the band wagon. Remember Iraq, Afghanistan,Lybia, Syria now Nigeria and Cameroon. All these wars are being fuelled by the UK USA and France. Selling their Weapons abroad destabilising sovereign Nations whilst advertising its self to be a democratic Nation of freedom and peace. Why are you surprised when foreigners come here to enjoy that freedom and democracy when the British gov and co have destroyed their nations to plunder resources? Sorry foreign aid is meant to destroy and plunder. Basic economics says those with the natural resources are the richer nations how come British currency is higher than that of the rest of the world? The Universal Credit system is a deliberate plan to frustrate and occupy the Masses to fight against foreigners and amongst each other. Create a problem and then gov comes in to be peace maker. Divide and conquer.
    They said no more bonuses to be paid to the bankers. Tax payers bailed out the banks and immediately those bonuses were paid out. What did the British people do? NOTHING. SO BRITS STOP GOING ALONG WITH EVERYTHING THIS GOV DOES: STOP BLAMING FOREIGNERS FOR YOUR GOVERNMENTS EVIL DEED AND YOUR COWARDICE TO CHALLENGE YOUR GOVERNMENT


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