Tax reform group claims Universal Credit penalises self employed

Self-employed individuals who claim the new Universal Credit can be worse off than employed claimants earning comparable amounts for the same type of work, according to the Low Incomes Tax Reform Group (LITRG). The LITRG has called for an improvement to the pilot Universal Credit system, which will eventually replace benefits such as tax credits, as the existing pilot is not challenging the impact of the new system on the self employed effectively. The Universal Credit system will require the self employed to draft monthly accounts for the Department for Work and Pensions (DWP) on a different basis than annual information required by HMRC.  Also, the DWP’s ‘minimum income floor’ assumes a specific amount of profit is made each month even if the actual profit is lower and doesn’t allow for trading losses to be offset against forthcoming months profits.  LITRG’s Technical Director Robin Williamson stated that the Universal Credit rules for the self employed should take into account how small businesses really operate.
Read more about the LITRG’s concerns at:
http://www.litrg.org.uk/News/2013/131112_PR_wider_uni_credit_pilot

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