Universal Credit: model reg 77 (company analogous to a partnership or one person business)

[MaxGhenis]

Universal Credit Regulations 2013 reg 77 ("Company analogous to a partnership or one person business"; NI: UC Regs (NI) 2016 reg 77) is not modelled. For a person who stands in a position analogous to a sole owner or partner of a company carrying on a trade or a property business:

• Capital, 77(2) and (3)(a). The value of their holding in the company is disregarded. They are treated as possessing the company's capital, or their share of it, less assets used wholly and exclusively for a trade while they are engaged in it.
• Earnings, 77(3)(b) and (4). For a trading company, its income or their share is their self-employed earnings, calculated under reg 57, on top of any pay as its director or employee.
• Minimum income floor, 77(3)(c). If the trade is their main employment they are treated as gainfully self-employed, so reg 62 applies.
• Exclusion, 77(5). None of this applies where their income from the company is employed earnings under ITEPA Part 2 Chapter 8, 9 or 10. From 28 November 2018 that is limited to income from main-employment activities; before then it was Chapters 8 and 9 whatever the main employment (SI 2018/1129 reg 3(5)).

Source: https://www.legislation.gov.uk/uksi/2013/376/regulation/77. Guidance: ADM H4360-H4377 and H1874-H1893.

Without it, the model counts an owner-manager's shares as ordinary capital and ignores the company's income. Once dividends leave UC unearned income under reg 66(1) (#1950), a company owner's income would not count at all.

Raised by #1948, question 2.