The self-employed and Universal Credit
[ch 1: page 16]The TUC explains that self-employed earners face reductions in the level of support they receive if they do not meet the so-called Minimum Income Floor (MIF). This requires them to earn the equivalent of 35 hours a week at the National Minimum Wage. The self-employed are more likely to have fluctuating earnings, which affects the amount of UC they receive because it is assessed on the previous month’s income. The TUC points to an example modelled by the Low Incomes Tax Reform Group (LITRG) in which the self-employed person received £2,600 less UC than their employed counterpart.
The LITRG October 2017 report, Self-employed claimants of universal credit — lifting the burdens, called for a number of changes to the UC system for self-employed claimants and says that without them, “there is a very real possibility that people will be discouraged from starting self-employment and existing claimants may be forced to give up their work”.
It says the current system does not work well for self-employed claimants who have fluctuating income and/or expenses, or who have a large, one-off business expense in a particular month. Also, it says it does not give people long enough to establish and grow their business.
The group is calling for changes including:
• allowing self-employed claimants with fluctuating income to average their income over a period of up to a year;
• changes to the calculation of the MIF and increasing the start-up period during which it does not apply from one to two years;
• greater consistency in definitions of self-employment; and
• more specialist support for self-employed UC claimants.