Universal Credit warning as self-employed could see payment cut from today

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Universal Credit is designed to support those on a low income, or who are currently out of work. The sum is overseen by the Department for Work and Pensions (DWP) which lays out the rules on how the payment is administered. However, there is a major change which is taking place today which is likely to affect many individuals.

This is the reintroduction of the minimum income floor (MIF), a policy which was temporarily paused due to the coronavirus pandemic.

Usually, if a person is self-employed, their Universal Credit payments are based on monthly earnings, but can be based on the MIF instead.

The minimum income floor is how much the DWP expects a person to earn each month – rather than what they actually do earn.

This is usually the case for self-employed people who have low earnings, meaning their benefits can be worked out on a higher earning than they have.

READ MORE: Rishi Sunak warned furlough must be extended as end date looms

IPSE, the Association of Independent Professionals and the Self-Employed, has argued its research showed the suspension of MIF led to a 341 percent increase in self-employed Universal Credit claims.

Andy Chamberlain, Director of Policy at IPSE, commented on the matter.

He said: “Universal Credit has been an essential lifeline to hundreds of thousands of freelancers during the pandemic – especially those excluded from the Government’s SEISS grants.

“Although we understand that as the economy opens up, Government must adjust its support schemes, it should not start by pulling the rug from under the worst-hit self-employed.

“The Minimum Income Floor unfairly stopped self-employed people accessing Universal Credit before the pandemic, because it did not account for freelancers’ naturally volatile incomes.

“Rather than looking at the actual earnings of self-employed claimants, it assumed they were making a base level of profit, which in many cases was false. 

“Government rightly removed this impediment during the pandemic – and extended the suspension earlier this year. But now is not the time to reintroduce the MIF: many freelancers are still in dire financial straits and need this ongoing support.

“We urge Government to scrap the MIF so struggling freelancers can continue to get support. Or, at the very least, government should extend the ‘Start-Up Period’ when MIF does not apply from one year to three, allowing newer freelancers – who are often the most financially fragile – a bigger grace period to get their businesses off the ground.”

The minimum income floor is calculated using the National Minimum Wage for a person’s age group, and it is based on full-time working hours.

If a person earns more than the MIF, their Universal Credit is based on their actual earnings.

But earning less than the MIF means benefit payments will not be topped up, and Universal Credit may be smaller.

This could impact, for example, those currently facing business or trading restrictions, or individuals who are required to self-isolate. 

Those worried about how Universal Credit changes will impact them are encouraged to speak to their work coach to gain further guidance. 

A DWP spokesperson said: “We are committed to supporting those most in need, spending billions more on welfare, including support for the self-employed.

“We will continue to assess how to best provide support as we build back better.”



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