Universal Credit for the self-employed: information for accountants

Background

Since 16 October 2023, DfC has been writing to customers who are still getting these older benefits and tax credits advising them that these benefits and credits are ending and they should consider moving to Universal Credit to continue receiving financial support from the Government. The letter that issues to customers is known as a Migration Notice letter. This migration is known as Move to Universal Credit or Move to UC.

When a customer claims Universal Credit, any benefits or tax credits it replaces for them will stop and they will not be able to go back to their previous benefits or tax credits once they have claimed Universal Credit.

Customers must make their claim to Universal Credit by the deadline date of their Migration Notice letter (i.e. within three months) as their benefit or tax credit entitlement will end on the day before the deadline.

It is important however that customers do not take any action until they receive a Migration Notice letter from DfC.

Customers can obtain free independent advice on all aspects of Move to Universal Credit by contacting Advice NI.

Claiming Universal Credit if you are self-employed

Universal Credit is claimed online via the nidirect website where customers can access information on how to claim, including step-by-step video guides and detailed information on what they need to do if they are self-employed.

Self-employed Universal Credit customers will be invited to an interview to determine if they are ‘gainfully self-employed’ for Universal Credit purposes.

Explaining the Universal Credit term: Gainfully Self-employed

Universal Credit uses the term ‘gainfully self-employed’ to identify whether a customer will be required to look for other work to be entitled to Universal Credit.

A customer will be classed as ‘gainfully self-employed’ if their self-employed work is;

• their main job or source of income,
• is organised (for example they keep records),
• developed (for example they have a business plan or advertise their work), or
• regular and expected to make a profit.

If the customer can prove they meet these criteria they will be, for Universal Credit purposes, considered as ‘gainfully self-employed’ and they will not be expected to look for other work.

Self-employed customers who do not meet the ‘gainfully self-employed’ criteria will not be required to attend an interview. Self-employed customers whose circumstances mean they would not normally be expected to look for or be available for work, can’t be found to be gainfully self-employed for Universal Credit purposes. They will not be required to attend an interview to determine if they are gainfully self-employed.

For example, a customer who has regular and substantial caring responsibilities for a severely disabled person for at least 35 hours per week would not be required to attend an interview.

Detailed information on Universal Credit for self-employed customers is available on nidirect.

Tax Credits customers claiming Universal Credit

Self-employed people with a low income who were in receipt of Tax Credits will get a Migration Notice letter telling them that their Tax Credits are ending and that to continue to get financial support they should make a claim to Universal Credit.

‘Transitional Protection’ payments are an additional amount payable that will help with their move to Universal Credit. The payments will make up the difference if their Universal Credit entitlement is less than their previous tax credits or benefits.

Tax Credits awards will end from the date the customer submits their claim to Universal Credit.

Customers need to be aware of the key differences between Universal Credit and Tax Credits.

Tax Credits customers:

• must report their income annually.

Universal Credit customers:

• must report their self-employed income and expenses once a month using their online account.
• will not receive their Universal Credit payment until they have reported their business income and expenses. If they report late, their payment may be delayed.

Tax Credit customers who receive a Migration Notice and have capital or savings over £16,000

Tax Credit customers who have capital or savings above £16,000 will be eligible to claim Universal Credit for a maximum of 12 Assessment Periods. A Universal Credit Assessment period is one calendar month.

If their capital or savings remain above £16,000 after the 12 Assessment Periods, they will no longer be eligible for Universal Credit.

Further information is available on nidirect.