Universal credit for people working through their own limited company
Not everyone that works through their own limited company is a high earner. If you have a lower income, have a fall in income or are unable to work for the moment, you may need to make a claim for universal credit. If you are in this situation, read on.
If you are providing your services though your own limited company, we have lots of information on our website to help understand the tax position. But what about welfare benefits?
Universal credit (UC) is gradually replacing working tax credit as the primary welfare support for low-income working-age people. The Department for Work and Pensions (DWP) pays universal credit, and the DWP are different to HMRC. Under universal credit, there are special rules for certain company directors. If these rules apply, the limited company structure is effectively ignored and the director treated as self-employed.
If you have a limited company and need to claim universal credit (and indeed, the other way around – if you are on benefits and thinking of setting up a limited company!), it is very important to understand exactly how running a limited company may be treated for UC purposes.
In a guide written for contractor support site Free-work, we look at how universal credit works for limited company directors who need to make a claim.
