A recent change to Universal Credit for self-employed claimants could mean their payments will reduce. Our Money Advice Officer explains what’s changing and what you can do about it.
What’s the issue?
In response to the Coronavirus pandemic, the Government changed the law from 30 March 2020 to give Universal Credit Work Coaches extra powers to reduce the requirements on self-employed claimants.
These powers included reducing the ‘minimum income floor’, the minimum amount of earnings a self-employed claimant is assumed to have, even to zero if appropriate, and extending the start-up period, the initial 12 months after first becoming self-employed during which the minimum income floor is not applied.
Many self-employed claimants have benefitted from these easements whilst their ability to earn has been affected by the pandemic.
What’s changing?
New regulations which came into force from on 31 July 2021 mean that the minimum income floor can be re-applied to claims from as early as September 2021. This would mean that claimants’ Universal Credit payments could decrease if they are not earning at least the minimum wage for the number of hours they would normally be expected to work (usually 35 hours per week).
For claimants who were still in their start-up period on 30 March 2020, the regulations say they will now serve the remainder of their start-up period once the DWP confirm they are still in gainful self-employment. For example, if a claimant was 6 months into their start-up period in March 2020, they will now get another 6 months following these regulations.
What if business is still impacted by the pandemic?
Under the new regulations, Work Coaches still have discretion to reduce the minimum income floor to as little as zero. However, this must be reviewed every 2 months and can only last for a maximum of 6 months. They can cancel this at any time if the situation has improved and apply the full rules again.
How can the impact be minimised?
There are some things you can do to delay this change or reduce its impact.
Ask for an extension to the easements if business is still being affected by the pandemic. Speak with your Work Coach, explain the situation and provide any evidence you can to show that you can’t make as much money as usual. Ask for the minimum income floor to be reduced to zero so your Universal Credit payments aren’t reduced.
Ensure you have the correct requirements on your claim. There are certain situations where the requirements for the number of hours you are expected to work are reduced, for example if you have childcare or other caring responsibilities, are recently bereaved or have been a victim of domestic abuse. However, Work Coaches also have discretion to reduce these requirements for anyone who has ‘complex needs’. This is not defined and will be considered on a case-by-case basis, but some examples of complex needs include family emergencies, temporary homelessness, family breakup, being a victim of harassment or bullying, substance or alcohol addiction, mental health issues, language/cultural barriers or being a victim of violence. If the number of hours you would be expected to work is reduced, then the amount of assumed income for the purpose of the minimum income floor is also reduced, so your Universal credit claim would not be affected as much.
Where can I get help?
You should first speak to your Work Coach and try to get the best outcome this way. If you disagree with the outcome of this, you can ask for advice from an agency such as Citizens Advice. If you are a Warrington Housing Association resident you can contact our Money Advice Officer for further advice and support.
