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Minimum Income Floor
- intermax
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17 hours 38 minutes ago #311262 by intermax
Minimum Income Floor was created by intermax
My son, in his early 50s, is a computer programmer. He has always, until a year ago, made a good self-employed living paying himself through a company of which he and his wife are the directors. However, as a result of AI and his age, work has dried up and for nearly a year he has been on self-employed UC. Shortly his year of grace will end and the DWP will impose the Minimum Income Floor. This assumes that his company pays him the National Minimum Wage, which it can't, and that amount will be assumed to be his income for the purpose of calculating UC. This will result in a £900 drop in UC per month and make it impossible to pay the mortgage.
Initially he was told that he could move to job-seeking UC but now the DWP is saying that, so long as the company remains in existence, he cannot move to job-seeking UC and the Minimum Income Floor deduction will apply.
It might appear that the best thing would be to close the company but that is also not straightforward as the company owes money to HMRC and the bank. To close it down involves dealing with the creditors and administrative fees levied by the government of four to five thousand pounds.
What is the way out of this trap? Can the DWP force him to remain self-employed even though he is earning almost nothing?
His wife earns a small amount of money, also self-employed and well below the MIF. They have two children under 18 in full-time education and an 18 year old living at home.
Any ideas?
Initially he was told that he could move to job-seeking UC but now the DWP is saying that, so long as the company remains in existence, he cannot move to job-seeking UC and the Minimum Income Floor deduction will apply.
It might appear that the best thing would be to close the company but that is also not straightforward as the company owes money to HMRC and the bank. To close it down involves dealing with the creditors and administrative fees levied by the government of four to five thousand pounds.
What is the way out of this trap? Can the DWP force him to remain self-employed even though he is earning almost nothing?
His wife earns a small amount of money, also self-employed and well below the MIF. They have two children under 18 in full-time education and an 18 year old living at home.
Any ideas?
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- David
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16 hours 8 minutes ago #311263 by David
Nothing on this board constitutes legal advice - always consult a professional about specific problems
Replied by David on topic Minimum Income Floor
Hi intermax
You mention a few times the DWP is saying........but who is doing the saying? Is it a Work Coach, UC Case Manager or telephony agent or has it been to a DM for a decision.
The advice you have been given is incorrect. The company director can start looking for full time PAYE employment and in that case he will fail the UC Gainful Employment test and the MIF will not apply. Here is the guidance ...have a read and let me know:-
The gainful self-employment test: main employment
H4023 As part of the gainful self-employment test, the DM needs to decide if the trade, profession or
vocation is the claimant’s main employment1
. This is the case for claimants who are
1. only undertaking S/E activity but on a few hours or low paid basis and
2. both S/E and also working as an employed earner.
1 UC Regs, reg 64(1)(a)
H4024 In determining whether self-employment is the person’s main employment, the DM should
consider whether self-employment is the
1. main employment activity and
2. claimant’s main employment goal.
H4025 Evidence gathered at the Gateway Interview (or elsewhere) which may indicate whether the
trade, profession or vocation is the main employment include
1. a statement of the number of hours spent on the activity and
2. the claimant’s intention as to which activity is their main form of employment and
3. the amount of earnings from the S/E activity.
H4026 - H4029
H4030 To determine whether the S/E activity is the main employment, the DM needs to consider the
amount of available work hours spent on it.
H4031 The S/E activity is likely to be the claimant’s main employment where the claimant
1. undertakes only S/E activity and it occupies a significant proportion of their expected number of hours
per week. S/E activity which accounts for more than half the expected number of hours is very likely to
show that self-employment is the main employment or
2. undertakes both S/E and employed earners activity and the S/E activity takes up more time than the
employed activity (but also have regard to H4032 2.) or
3. is starting a new business and the types of activities outlined in H4053 take up most of their expected
number of hours per week.
assets.publishing.service.gov.uk/media/6...3d6c90d9a/adm_h4.pdf
H4361 The effect of H4360 is that where a claimant has been found to be employed as a company
director in a position analogous to a sole trader or partner, the claimants is treated in the same way as a
claimant who runs a business or owns a property on their own account. For the purposes of UC, a person
trading through a company is treated in the same way as one who has not set up a company to conduct
their business. ADM Chapter H1 provides guidance on the treatment of capital in these case
Note 3: a company director can be self employed and an employed earner, This should be determined in the usual way.
David
You mention a few times the DWP is saying........but who is doing the saying? Is it a Work Coach, UC Case Manager or telephony agent or has it been to a DM for a decision.
The advice you have been given is incorrect. The company director can start looking for full time PAYE employment and in that case he will fail the UC Gainful Employment test and the MIF will not apply. Here is the guidance ...have a read and let me know:-
The gainful self-employment test: main employment
H4023 As part of the gainful self-employment test, the DM needs to decide if the trade, profession or
vocation is the claimant’s main employment1
. This is the case for claimants who are
1. only undertaking S/E activity but on a few hours or low paid basis and
2. both S/E and also working as an employed earner.
1 UC Regs, reg 64(1)(a)
H4024 In determining whether self-employment is the person’s main employment, the DM should
consider whether self-employment is the
1. main employment activity and
2. claimant’s main employment goal.
H4025 Evidence gathered at the Gateway Interview (or elsewhere) which may indicate whether the
trade, profession or vocation is the main employment include
1. a statement of the number of hours spent on the activity and
2. the claimant’s intention as to which activity is their main form of employment and
3. the amount of earnings from the S/E activity.
H4026 - H4029
H4030 To determine whether the S/E activity is the main employment, the DM needs to consider the
amount of available work hours spent on it.
H4031 The S/E activity is likely to be the claimant’s main employment where the claimant
1. undertakes only S/E activity and it occupies a significant proportion of their expected number of hours
per week. S/E activity which accounts for more than half the expected number of hours is very likely to
show that self-employment is the main employment or
2. undertakes both S/E and employed earners activity and the S/E activity takes up more time than the
employed activity (but also have regard to H4032 2.) or
3. is starting a new business and the types of activities outlined in H4053 take up most of their expected
number of hours per week.
assets.publishing.service.gov.uk/media/6...3d6c90d9a/adm_h4.pdf
H4361 The effect of H4360 is that where a claimant has been found to be employed as a company
director in a position analogous to a sole trader or partner, the claimants is treated in the same way as a
claimant who runs a business or owns a property on their own account. For the purposes of UC, a person
trading through a company is treated in the same way as one who has not set up a company to conduct
their business. ADM Chapter H1 provides guidance on the treatment of capital in these case
Note 3: a company director can be self employed and an employed earner, This should be determined in the usual way.
David
Nothing on this board constitutes legal advice - always consult a professional about specific problems
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