People on Universal Credit in these jobs face little-known ‘minimum income floor'
Self-employed people receiving Universal Credit are subject to an additional rule known as the Minimum Income Floor, which doesn't apply to other claimants. This is used to calculate how much Universal Credit they can get per month based on their earnings.
If you're self-employed and your earnings fall below the Minimum Income Floor, your benefits will be calculated using the Minimum Income Floor amount rather than your actual earnings. More details can be found on the Gov.uk website.
Minimum Income Floor amounts vary from person to person. Your threshold will be determined at your self-employed appointment when applying for Universal Credit.
This level is intended to be equivalent to what someone working full time in your situation would earn on national minimum wage or national living wage after tax and National Insurance. According to Turn2Us, this is usually set at 35 hours per week for most people.
For instance, if you're over 21 and self-employed claiming Universal Credit with no reason to be exempt from the Minimum Income Floor, this level would likely be around £427.35 a week based on the national minimum wage.
So if you earned £300 a week, the Minimum Income Floor would be used instead of your actual income to calculate how much Universal Credit you receive in that payment period. However, if your earnings were above £427.35 per week then your actual income would be used in this calculation.
In these Universal Credit calculations, if your wages increase your benefit payment will likely reduce. While there's no limit to how much you can work, your payments will usually decrease at a rate of 55p for every extra £1 you earn.
This typically results in your benefits being calculated based on a higher income than you actually received. However, according to Turn2Us, some people are exempt from this rule.
People exempt from Minimum Income Floor:
Those with limited capability for work or work-related activity
Carers providing care for more than 35 hours per week
Over state pension age
Looking after a child under three
Foster carers for a child under 16
Within the first 12 months of being self-employed
Self-employed people will also need to report their monthly earnings, and expenses, to the DWP for each assessment period they're claiming Universal Credit. Turn2Us warned that if you don't send in these figures when required your benefits could be suspended.
When self-employed people apply for Universal Credit, they also face some different requirements. Turn2Us noted: "You will need to show that your self employment is organised, developed and carried out regularly in expectation of profit.
"It must also be your main form of employment. If you cannot demonstrate these things, you will need to agree to look for and be available for other work in order to claim Universal Credit."
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