Universal credit and claiming benefits while in a workers coop

Hi, not an expert, but working in a worker co-op is no different than working anywhere else from a tax / employment law perspective, at least officially anyway.

Initially company directors (which we are as a workers coop) couldn't claim universal credit but I'm not sure if that's changed by now. They also might consider it self-employment which is subject to this minimum income floor effectively removing the safety net because after 12 months they assume you're earning minimum wage x 35 hours even if you're not. There's also in-work conditionality where they can make you leave a job to take a higher paid one. So we're a bit worried about if any of those will affect us.

@alexhilton You are only company directors if you are either managed by general meeting or on the board. So it may be worth thinking about having a board if some of the workers don't need UC and some do. It won't be classed as self employment if you are on PAYE. In work conditionality is shit.

I am successfully claiming tax credits as a director of my workers coop and have done for years, despite being paid via PAYE. It has involved a slightly higher amount of paperwork, but it has been worth it. To the best of my knowledge (which is by no means expert, simply my understanding in Leeds, as of October 2017), as Universal Credit hasn't been rolled out to include Company Directors yet, we are continuing instead to receive straightforward tax credits. We aren't the only exemptions, it's a complete mess.

I imagine the Federation of Small Businesses (https://www.fsb.org.uk) is the best place to get information about this - despite deciding to join 3 years ago, i never did get round to it :-( But I think it would be useful for someone in the small/radical worker coop sector to be a member and get info for the rest of us!

It is worth investigating all the exemptions to UC, because most will also be needing Housing Benefit - I guess a local citizens advice bureau will be able to comment on how to access HB if you're not eligible for UC. But perhaps the best thing to do is to get a housing benefit application in ASAP?

On a related note, one of the good uses of a small workers coop is to regulate (regularise?!) the amount that its members are paid, to even out low and high income periods. One reason i've had such a reliable claim over time is because Footprint pays me the same amount every week, no matter whether I've worked way over or way under my regular hours. Sometimes there's loads of money owing to me, sometimes i can take time off (like now) or just get paid even when there's not much work to be done. That really does minimise benefits claim bureaucracy.

Hi, Thanks for all the replies , really useful. There's some really good ideas about regularising how much we pay ourselves each month (at the moment we vary our payments depending on how much work has come in). And about amending our constitution to not have all workers as directors if we need to in order to avoid creating benefits problems.

I know when universal credit was first set up company directors couldn't join - all the info I can find now refers to company directors claiming universal credit as self-employed: eg https://www.gov.uk/self-employment-and-universal-credit "Everyone claiming Universal Credit needs to report their self-employed earnings at the end of each monthly assessment period. This includes company directors, even those paying themselves by PAYE." It's not super clear if this applies to workers coops but it's all the info i can find.

The older benefits like tax credits and housing benefit are closing to new claims - i think this varies according to where you live at the moment. I've been told I can't put in a new claim for housing benefit due to all new claims having to go through universal credit (my situation is a bit more complicated as I'm also a part time student but I earned too much over the summer and got my old claim closed).

I tried to do a bit more research. Based on their advisor guidance at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/720561/admh4.pdf (p47 of this document) I think they would treat a workers coop as a "company analogous to a partnership" and count it as self-employed. Which is a problem with this minimum income floor effectively meaning they'll assume you get minimum wage x 35 hours

I think might be an emerging problem for workers coops :(

Thanks Alex,

I think it may be a bit more complicated than this and we will need to try to come up with a work around. The most obvious one being if the workers co-op was not managed by general meeting and so not everyone was a director and being a company ltd by guarantee so as to not have share capital.

But we do need to come up with a strategy thanks Andy

oh dear yes, major adjustments needed, I'll let the Rad Routes trading coops network know. Thanks for doing the research Alex, much appreciated.
I feel like the trailing end of the generation that actually benefitted from benefits, student grant, etc.

Thanks :)