Self-employment: Companies
If a claimant has a company or property business that is analogous to that of a sole trader, they will be treated for UC purposes as being a sole owner or partner. DWP guidance states this is a question of fact in each case. Broadly speaking, a property business exists where it is generating income from land either in the UK or abroad.
Where this applies, they will generally treated as possessing an amount of capital equal to the value (or their share of the value) of the capital of the company/property business and the value of their shares in the company will be disregarded when working out their capital.
In relation to a company which is carrying on a trade:
- Any assets of the company that are used wholly and exclusively for the purposes of the trade are disregarded from the claimant’s capital while they are engaged in activities related to that trade.
- The income of the company, or that person’s share of that income, is to be treated as the person’s income and calculated in the same manner as other self-employed UC claimants. If the activities in the course of the trade are their main employment then they will be treated as if they are in gainful self-employment and the minimum income floor will apply.
- Any self-employed earnings under these rules are in addition to any employed earnings that the person receives as a director or employee of the company.
These rules do not apply where the income is employed earnings under arrangements made to workers by intermediaries or through managed service companies.
The purpose of these rules is to stop claimants from forming a company in order to avoid the harsh effects of the MIF.
Last reviewed/updated 2 August 2021