CARERS ALLOWANCE INCOME
Hi we have a case where a client has been called into an interview regarding her Carers Allowance. The DWP are saying that they have information that the client has been working. The client says they haven’t worked for 3 years. The client is a shareholder in her husbands company and she rents properties out but says that she receives no income as the rent covers the mortgage and maintenance of the property.
Will the income of any shares be classed as income from working ?
Will any of the rental income be taken into account as earnings ?
Thanks in advance
Income from shares is not earnings, and the rental income is the company’s, not hers.
Is she a director of the company? Does she get any pay as a director?
The client is a shareholder in her husbands company and she rents properties out
is the husband’s company one entity, and her renting properties out a different thing she’s doing for herself?
Charles in his response seemd to think you’re talking about the same thing, which may be so, and his answer is on that basis
but if, in fact, this is two separate things, then the renting properties out would need to be considered separately (and she’d have to provide accounts to show it all). probably wouldn’t take too long time wise but otherwise needs to be looked at separately.
Good point. Still unlikely to be earnings though: renting out properties is not usually on a scale that amounts to a “trade, vocation or profession” which is what it takes to be self-employed for UC purposes - Reg 57(1). Much more likely to be seen as income derived from capital
Yes, I hadn’t understood the question that way!
If the rentals are separate to the company, then, like HB Anorak says, it depends on whether it can be considered a business or an investment. See paragraphs 15743-15746 here.
If it is a business, then you can only deduct mortgage interest from the gross receipts, not any capital repayments.
Hi thanks for the replies , sorry for the confusion.
Spoke to client last night , she is a shareholder in her partners company ( since September 2018 ) but has not received any income/dividends.
She owns properties and rents them out , she uses the rental income for paying the mortgage and maintaining the properties.
She is not working as an employee , does not receive an income from either her partners business or rental properties and is caring for her father 35+ hours per week.
Once again thanks.
Roughly how many rental properties are there?
Just realised I assumed your question was about UC - it’s so all-pervasive these days!
For Carers Allowance we are concerned with the Social Security Benefit (Computation of Earnings) Regulations 1996. Self employment here is defined by default as gainful employment other than as an employed earner; an employed earner in turn means a person employed under a contract of service or an office holder.
In relation to the company she is not an office holder because she isn’t a director (or at least you haven’t said she is) and she isn’t being paid as an employee either so that won’t affect her entitlement to Carers Allowance.
As for renting out the properties, it comes down to whether she is in “gainful employment”. That’s a question of scale, so as Elliot says: how many properties? If the properties keep her busy enough that you could call it “employment”, the net profit is calculated without allowing for capital expenditure so the mortgage payments would need to be broken down into interest and repayment; no endowment instalments would be allowed for the same reason.
Hi thanks for all your responses. Client was interviewed as DWP had information she was in employment. DWP accepted not emloyed/earnings/income as a shareholder and not employed/earnings/income from the 2 propertiers she rents out.