Universal Credit, Self-employment and holiday pay

[therealgeorgebush]

How do holiday periods work when self-employed and claiming UC? I'm not yet self employed but I understand that when I am  I will complete and income and expenditure statement for each period rather than my entitlement being based upon my current annual salary. What I would like to do is to put  money asid for "holiday" pay and then declare that as income in the period I am off. While this seems sensible, I worrythat I may be breaking rules. or is there any way that the total entitlement is adjusted over a longer period based upon an average income?

 

Any advice is much appreciated.

George

[unclebulgaria67]

If you are self employed claiming UC, at the end of each monthly assessment period, you would report income and expenses on a cash in and cash out basis.

 

So each month is going to be different, depending on who pays you for goods/services you have provided. Also the amount you spend on running your business is going to vary.

 

Just because you are on holiday does not mean your customers are not going to pay you, unless you receive instant payment on the days you work, so if you are on holiday it means you will not be paid.

 

The UC payments would vary each month as they take into account the net earnings positions from the income and expenses information you provide.

 

You need to keep your business Banking separate to private finances and you need to keep accounts of income and expenditure.  At some point you could be asked to attend the Job Centre so they can check all of the information. They will also want to see invoices, receipts and tax returns.

 

After 12 months of trading, they will add a presumed earnings amount called a minimum income floor to your UC payments calculation. This amount is how much you would earn from standard employment working 35(*) hours per week at national minimum wage. This is designed to stop people receiving UC payments where a self employed business is not performing well enough to be considered gainful employment. Some people will struggle running a business which is paying them less than a job at the local supermarket.

 

*35 hours is based on someone who can work full tim e.g.  Is not main carer of children under 13.

[therealgeorgebush]

Sorry, I should have been a bit clearer. The self employment will be a taxi driver, so when I am not working i will not be earning, that's why I would like to bank some holiday pay.

 

But that leads me on to a further question. Obviously not all the money I take is profit. Do I estimate expenses for the monthly figure, based upon pro-rata for things like insurance that I will be payng annually. and  vehicle depreciation, loan interest etc?

 

Thanks again

[unclebulgaria67]

Cash in and cash out.

 

Record when you receive payment and when you spend it. The monthly income and expenses you complete is your monthly account totals for these. 

 

It is that straightforward.

 

Some months you may earn very little, but have Insurance etc to pay, so you will show a loss.

 

 

 

 

[tomtom256]

You also need to read up on permitted expenses as UC rules are different to HMRC rules.

 

Is it a hackney taxi or private hire? Hackney allows all vehicle expenses to be claimed, however a private taxi will only allow the mileage to be claimed, which includes a figure for your insurance etc.

 

Once the income and expenditure has been declared, you can then bank any amount for your holiday pay, but be careful not to go over the savings threshold for UC.

 

See

How to report your earnings from self-employment - GOV.UK

WWW.GOV.UK