The change from tax credits to universal credit.

[.David]

I’m hoping to find out a little of peoples experience of moving from claiming tax credits to claiming universal credit. We’ve been informed that later this year we will get notice and a deadline to move to universal credit. A quick search on the internet comes up with a couple of stories from the likes of the NFU and Farmer Weekly, they explain the shortfalls of the new system when applied to the self employed and especially when the work is seasonal. With universal credit you have to provide your profits on a monthly basis, meaning getting your accounts up to date, valuing stock, etc every month. As far as I can tell if you make a loss in a particular month they won’t count it as a loss, instead they will use a “minimum income floor” based on 35h per week at minimum wage, and this figure will be used to make your calculation, loosing reward that month. On the other hand if you sell a batch of stock in a particular month and make a large profit for that month then that figure is used without any averaging to make your claim loosing reward in that month also. Under the tax credit system your profits are averaged out over the year so you receive a similar payment each month.
Another worry is that it would appear that my business will be assessed to see if it is viable, a coach will be provided to help me through the process but they may ultimately advise me that my low income business isn’t viable and that I should seek other employment.
I don’t like the idea that I’ll have to go and be probed at the job centre and I dare say that the fact that I grow tons of beef a year and pay out thousands to help keep other local businesses going won’t matter.
I know claiming any sort of benefit can be a bit of an embarrassment, it certainly is for me. Myself and my wife had never claimed anything until we had children. But now she doesn’t like my suggestion that we aught to get ready to do without.
I’d be interested to hear any ones experience and any tips on how to make it work. Cheers.

 

[.David]

A link with a list of concrete on this subject.

https://committees.parliament.uk/writtenevidence/85750/pdf/

 

[J 1177]

Universal Credit for Farming Families | Facebook

I’ve set up this group as a discussion area for farming families who are being moved from Tax Credits to Universal Credits. Please feel free to post about your experiences or questions.

www.facebook.com

 

[ringi]

Can the farming work be put in a ltd that then pays a consistent wage each month?

 

[PI Stsker]

Hard to judge the situation judging from the above but being cynical if your working ‘full time’ on your self employed buisness and not making enough money and are viable for benefit it begs the question is it actually a buisness to begin with? Would you be financially better off binning it off and working for someone else or doing something else?

you will get a job coach you need to go to weekly meetings with, who will look at it the same way as this and if they deem it a loss leader they won’t give you the benefit unless you look for another job.

 

[ringi]

Hard to judge the situation judging from the above but being cynical if your working ‘full time’ on your self employed buisness and not making enough money and are viable for benefit it begs the question is it actually a buisness to begin with? Would you be financially better off binning it off and working for someone else or doing something else?

That defends on number of children and if the mother can work. It possible to be making well over minimal wage and still get univeral credit.

 

[Still Farming]

Earn 22k and still claim allegedly?
With cut backs in single farm payments most will be claiming this possibly??

 

[ringi]

Earn 22k and still claim allegedly?
With cut backs in single farm payments most will be claiming this possibly??

Have any disabled people in the household and the earning limits can be a lot more. But the complete system assumes a months income/profit is due to that months work and there is no sensible way to work out what a farms profit is each month.

The rules were created due to trades people taking payments in cash so their "profits" remain low while everyone knew there earning are more as otherwise they would take a job with a bulding company.

 

[Still Farming]

Have any disabled people in the household and the earning limits can be a lot more. But the complete system assumes a months income/profit is due to that months work and there is no sensible way to work out what a farms profit is each month.

The rules were created due to trades people taking payments in cash so their "profits" remain low while everyone knew there earning are more as otherwise they would take a job with a bulding company.

Usually possibly go on your last years accounts and then divided by 12 months to work out possibly?
That's all they can go by?

 

[Bokey]

I'd say be wary of anything off the government we used to claim tax credits years ago when my first child was born ,got a letter late last year saying we'd been overpaid 10 years ago and we owe them £4500 got my accountant to look into it turns out we'd given them the correct figures they had just overpaid us and now want it back it could crippling to some families and can anyone guess what computer software hmrc we're using at that time!

 

[ringi]

Usually possibly go on your last years accounts and then divided by 12 months to work out possibly?
That's all they can go by?

I would not depend on that as mostly it is setup based on "cash accounting" looking at each month in isolation. (If there was a easy way to do it, then NFU would have communicated the solution.)

 

[.David]

Can the farming work be put in a ltd that then pays a consistent wage each month?

Yes you are probably right there, I wouldn’t know without looking into it. More complications with registering and accounting for sure. Cheers

 

[le bon paysan]

Earn 22k and still claim allegedly?
With cut backs in single farm payments most will be claiming this possibly??

Yet on another thread , I got called a Parasite for accepting Agricultural Subsidies, as we still have them on the continent. Yet you're saying UK farmers will be claiming benefits.

 

[.David]

Hard to judge the situation judging from the above but being cynical if your working ‘full time’ on your self employed buisness and not making enough money and are viable for benefit it begs the question is it actually a buisness to begin with? Would you be financially better off binning it off and working for someone else or doing something else?

you will get a job coach you need to go to weekly meetings with, who will look at it the same way as this and if they deem it a loss leader they won’t give you the benefit unless you look for another job.

It’s actually worked the other way around for me, I used to have a well paid employment but have decided to try my luck on the farm my family has run and owned for 150 years. I’m still in a period of restoring buildings and infrastructure around the farm and up to now I’ve re invested everything I can into second hand machinery and building up stock. The tax credit system has allowed me to do this and I’ve been very appreciative of it.
I expect what you have said above will be the case, and if I have to do without it then so be it. I’ve operated without SFP for ten years because my father has claimed that so realistically once he retires I should be in a fairly good position.
My other option at the moment is to cut investment, curtail any projects or ambitions and keep things ticking over with what I have.
Thanks for your input.

 

[.David]

Usually possibly go on your last years accounts and then divided by 12 months to work out possibly?
That's all they can go by?

That’s basically how the tax credit system works at the moment, but with universal credit you apparently have to declare profit for the month.

 

[.David]

I'd say be wary of anything off the government we used to claim tax credits years ago when my first child was born ,got a letter late last year saying we'd been overpaid 10 years ago and we owe them £4500 got my accountant to look into it turns out we'd given them the correct figures they had just overpaid us and now want it back it could crippling to some families and can anyone guess what computer software hmrc we're using at that time!

Yes, we’ve always been carful to give actual figures at the end of each financial year as you can actually give estimates which no doubt leads to all kinds of trouble. Can’t believe they’d be looking for it 10 years later!

 

[ridger]

From what I hear you have to send a list of expenses and receipts for each month.

 

[ringi]

Yes you are probably right there, I wouldn’t know without looking into it. More complications with registering and accounting for sure. Cheers

It needs careful calculations as using a Ltd may increase tax compared to sole trader, it also needs someone who understand all the rules in detail to define the system to "pay" the wage when the company does not have the money in the bank for the wage.

(If we can worthwhile political parties in this country then there would be a more practical solution.)

 

[livestock 1]

I think a Ltd company needs to be able to pay a directors wage

 

[jondear]

Stopped get it as kids both now over 18 .Looks like they have made it as difficult as possible now ! Was always pot luck on getting something then paying it back as payed to much .!