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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Self-employed, earnings and secured loans?

Gareth Morgan
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CEO, Ferret, Cardiff

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Total Posts: 1995

Joined: 16 June 2010

Can I canvass opinions about a mortgage or secured loan question?  For Universal Credit the legacy conditions about the purpose of a loan – purchase or repairs – don’t apply; any secured loan qualifies. 

“Schedule 1 Part 2
Payments of interest on loans and alternative finance payments

  5.—(1) “Owner-occupier payments” means—
  (a) payments of interest on a loan which qualifies under sub-paragraph (2);...

  (2) A loan qualifies under this sub-paragraph if it is secured on the relevant accommodation.”

The zero earnings rule “ (4) A UC claimant shall not be eligible for the offer of loan payments if… (a) …, the claimant has any earned income; “ wipes out most ‘interesting’ applications for secured loans but, for self-employed people there are some situations which are less clear.

If in a startup period, at a time when there are no earnings, then it seems likely that a secured loan – for any purpose – may qualify for what would be a low interest ‘subsidy’.

What happens after a startup period?  If during an assessment period there are no real earnings, what is the position?

The SMI Loans Regulations state that ““earned income” has the meaning given in Chapter 2 of Part 6 of the UC Regulations;”

That boils down, in this case, to

“Minimum income floor
62…
(2) …  for any assessment period in respect of which the claimant’s earned income is less than their individual threshold, the claimant is to be treated as having earned income equal to that threshold.”

Is ‘treated as’, in that part, going to trigger ‘the claimant has any earned income’?

I won’t colour any responses by giving my view yet.