Cut to Universal Credit for Self-Employed Avoided

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Cut to Universal Credit for Self-Employed Avoided

Secretary of State for Work and Pensions, Thérèse Coffey, has announced the suspension of the universal credit ‘minimum income floor’ will now last until at least the end of April.

This means that many self-employed people will no longer face huge drops in payments.

Universal credit payment is based on many factors, including where you live, whether you have children and whether you're in a couple. It's also affected by how much you earn - or, how much you're assumed to earn under the minimum income floor rule.

What is the minimum income floor?

Usually, if you've been self-employed for more than 12 months, you would be affected by the minimum income floor.

Normally, the minimum income floor assumes you earn a wage which you may not actually get when you’re assessed for universal credit. If you claim the benefit when you've been self-employed for over 12 months, eligibility assessments will assume you earn at least the same as someone in paid employment with similar working hours on the minimum wage.

If you earn above the floor, you'll be assessed on your actual income.

Problems can arise for people who earn below the floor.

Here, when being assessed for the benefit the Government will assume you earn the (higher) minimum income floor, instead of looking at what you actually earn. The more you are deemed to be earning, the less universal credit you get.

The minimum income floor was suspended back in March in response to the pandemic.

This was seen as a lifeline for many self-employed workers who had seen income reduce drastically after Covid-19 hit, as it meant their universal credit payments were calculated on what they were actually earning, rather than an assumed amount (which may have been higher than the reality).

The rule was set to return on 13 November. The further suspension means self-employed people will continue to receive crucial financial support.

“This Government has taken decisive action throughout the pandemic to support the self-employed and is continuing to do so,” Coffey said.

“We have always been clear that easements would be reviewed as public health guidance and the national working environment changes. Extending the Minimum Income Floor suspension ensures these workers have security from the welfare safety net throughout the winter.”

You can read the full press release on the website.

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