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Coronavirus: Universal Credit - Self-Employed
Universal Credit - Self-Employed

Self Employed Income Support Scheme

Most self-employed workers have been able to claim assistance from the Self Employed Income Support Scheme (SEISS).

The first payment was made between 13th May 2020 (when the scheme opened to applications) and 25th May 2020. And further payments have been / will be made up to September 2021. Click here for more details.
NOTE: In Scotland those whose businesses were set up too late to qualify for help from the SEISS have been eligible for a £2000 grant.

For many self-employed workers these grants have meant that they have been able to keep running their businesses but because they have not been able to work during the Coronavirus outbreak, their earnings have been low (or nil) and therefore they have made a claim for Universal Credit.

Already getting Universal Credit?

 

Someone who is self employed and is currently in receipt of Universal Credit just needs to keep reporting their income and expenses as normal, even if they are reporting a loss. Their UC award should be based on any 'earnings' within a Assessment Period if any, and any loss can be carried forward.
NOTE: The Minimum Income Floor has been suspended until the end of July 2021, so a self-employed claimant's UC will be based on their actual earnings regardless of how long they have been trading. Click here for more information.

How will the various grants a self-employed person can receive due to the Coronavirus outbreak be treated?

New Regulations from 21 May 2020 confirm that:

  • The SEISS grant is treated as self employed income (a ‘receipt’) for the Assessment Period during which it is received (see below for more information).
  • Any grant or loan payment made to a self employed person to meet expenses or losses due to the Coronavirus outbreak are disregarded as capital for 12 months. These could be payments of the Small Business Grant Fund, Retail Hospitality and Leisure Grant and the Bounce Back Loan Scheme etc.
  • Where a self employed person is also an employer and receives a payment under the Coronavirus Job Retention Scheme, they are obliged to pass this on to their employee/s and so it is disregarded as income in their own UC claim.

How the SEISS payment affects UC
If a UC claimant receives a grant from the Self Employed Income Support Scheme this will be taken as income for the Assessment Period in which it is paid, but any losses in that period (and any carried forward from previous Assessment Periods) can be offset against it.

This means that payment of the SEISS grant will not result in any overpayment (ie there will be no need for the DWP to reassess entitlement in any Assessment Periods prior to the one it is being paid in) to include the payment as income).

But for some it may mean that their UC award reduces to nil and/or the 'surplus earning' rules may then apply - 
click here.

 

Not claimed Universal Credit?


Already getting Tax Credits and/or Housing Benefit?

Someone who is currently in receipt of Tax Credits and/or Housing Benefit may be able to stay on those benefits, but could be better off if they claim Universal Credit if eligible – they should seek advice from a Benefits Adviser who will be able to conduct a better off calculation.
Click here if they are getting Tax Credits.
Click here if they are getting just Housing Benefit.

 

Not currently getting any means-tested benefits?
As long as they meet the general eligibility criteria for UC (click here) then they can make a claim for it. Whether they are entitled or not, and how much they are entitled to, will depend on their personal circumstances and income.

Timing of the claim may be an issue if they are due some payments into their business - click here.

 

Benefit Cap


If they are claiming UC because their work has finished, and their total 'welfare' is higher than their Benefit Cap limit, then make sure the Benefit Cap is not applied straight away if they are entitled to the grace period.


The grace period applies where they (or the claimant and partner between them, if a couple) have earned the monthly equivalent of 16 hrs a week x the living wage in each of the previous 12 months (this is £604 from April 2020, and £569 from April 2019).


In these cases the Benefit Cap should not be applied until after the 9 month grace period. The claimant might need to provide details of earnings for the previous 12 months. (Note that some claimants are exempt from the Benefit Cap anyway, due to receiving certain other benefits).


NOTE: We have heard that if a claimant does not specifically ask for the grace period to be applied, it could be missed, as the UC computer system does not automatically apply it. Claimants will need to provide evidence of the last 12 months' earnings (and those of their partner or ex-partner if applicable).


Where someone is making a new claim for UC following a drop in earnings, then the grace period can apply as long as their earnings in the 12 months prior to making that claim are above the £604/£569 threshold. So where someone has delayed making the claim they could miss out on this grace period.


If they are refused because just one or two of the 12 months their earnings appear to fall below the threshold they should contact a Benefit Adviser to check that there hasn't been an error, for example in the dates that DWP have used. Likewise if someone has been earning just at or slightly over the threshold but is paid weekly or 4 weekly they might be denied the grace period - again they need to seek advice.



Other Help?


If they are not already receiving Council Tax Support they should make a claim as soon as possible from their Local Authority.

If they have school age children they may now be entitled to free school meals.

Click here for more information on the other help that may be available.


Frequently Asked Questions

I heard on the radio that if I claimed Universal Credit I'd only get £95.85 a week so I haven't bothered - but now my money's running out I'll have to - how am I going to manage?

Many headlines and news items - particularly when the Covid-19 benefit changes were introduced - had been stating that the only help available for the self-employed affected by the Coronavirus was £95.85 per week.

However, many self-employed workers are entitled to more support from the benefits system.

For example:
Dianna has had to close her sandwich shop. She’s thought about doing on-line orders but doesn’t think there will be many takers. She lives in a housing association rented two bedroom house with her 8 year old son. She hasn’t claimed benefits since starting the shop 15 years ago. She’s been living off savings but these are running out and although she has re-opened the shop takings are down. She's really worried about how they are going to live and pay the rent for her home (£134 a week) if she can only get £95.85 a week from the government.
Dianna will be able to make a new claim for Universal Credit. Her maximum UC is £1271.80 a month (the equivalent of £293.49 a week) before any deductions for earnings - but the first £292 a month are disregarded. So she is likely to receive more than just £95.85 a week.
If she receives a payment from the Self Employment Income Support Scheme this will be taken into account as earnings for the Monthly Assessment Period in which it is received, meaning any UC awarded before that is safe and will not be recovered.

 

I’m a self-employed hairdresser. I live with my partner and 2 children in a rented property. I had to shut up shop at the start of the Coronavirus outbreak and because I've had to introduce social distancing measures I'm getting much less income from the business.  My partner does not work and we don’t have any savings. We do get some Universal Credit. What should we do?

Continue to report your income and allowable expenses as normal. Your Work Coach can use their discretion not to apply the Minimum Income Floor as your work has been affected by the Coronavirus outbreak (this will last up to 12th November 2020). So during this period, your UC payments should be based on your actual takings (including if these are none) even if you have been trading for 12 months or more.

If you receive a payment from the Self Employment Income Support Scheme this will be taken into account as earnings for the Monthly Assessment Period in which it is received, meaning any UC awarded before that is safe and will not be recovered.

It is important that you continue to report your income and allowable expenses, if you are making a loss this can be offset against the grant when you receive it and only the balance will be taken as earnings when the DWP calculate your award for that Assessment Period.

If you are not already getting any help with your Council Tax Bill - make a claim for Council Tax Support.

And if your children are school age and you do not already get free school meals for them then contact your local authority - you may now be entitled.



I’d been working full-time for the last couple of years as a self-employed beautician when I had to cease trading due to Covid-19 restrictions. Now I'm back working but many of my regular customers have said they are either too frightened of infection or are cutting expenditure so will be doing their own nails, facials  etc at home for the foreseeable future. My income has dropped dramatically.
I’m single and not currently claiming any benefits – what help is available?

You can make a claim for Universal Credit, assuming you meet the basic eligibility requirements (eg. savings not more than £16,000, not a person from abroad who is excluded etc).

You’re probably best checking with a Benefits Adviser when the best time to claim is - this is particularly true if you are expecting a further payment from the SEISS. When you claim, you'll claim online. You’ll not need to attend the Job Centre at the moment, but you’ll need to communicate with your Work Coach either via your UC journal or over the phone.

Your Work Coach can use their discretion not to apply the Minimum Income Floor as your work has been affected by the Coronavirus outbreak (this will last up to 12th November 2020). So during this period your UC payments should be based on your actual takings (or no takings) even if you have been trading for 12 months or more.

If you need an Advance Payment to tide you over until your first UC payment, you can apply via your UC account.
If you receive a payment from the Self Employment Income Support scheme this will be taken into account as earnings for the Monthly Assessment Period in which it is received, meaning any UC awarded before that is safe and will not be recovered.

It is important that you continue to report your income and allowable expenses, if you are making a loss this can be offset against the grant when your receive it and only the balance will be taken as earnings when the DWP calculate your award for that Assessment Period.

If you are not already getting any help with your Council Tax Bill - make a claim for Council Tax Support 


When I was made redundant from my cleaning job two years ago I started my own small cleaning business, going into people's homes. So when my  nineteen year old student year old son started with a fever and a cough I knew we both had to self isolate. This will mean no income from the business - which isn't doing great anyway at the moment. I don't currently receive any benefits and I am worried about my bills.

You should make a claim for Universal Credit as soon as possible. You can do this online, or if that is not possible, by ringing the UC helpline. You might also qualify for New Style ESA while you are self-isolating – although any New Style ESA you receive will be taken into account when your UC is calculated.

You should provide your Work Coach with an 'isolation notice'  - for the period you need to self-isolate, you will be treated as having a Limited Capability for Work and if you are still self-isolating on the day your UC is assessed ie a month after your claim then let them know on your journal and request that your UC award includes a work allowance - this will mean some of your earnings will be disregarded.

You will need to report your income and expenses to the DWP on a monthly basis - it is important that you do this even if you have made a loss. Your Universal Credit should be calculated based on your actual earnings (with any losses carried forward to be offset against any income received in a later month). The government has decided to suspend the Minimum Income Floor for those self-employed claimants whose level of earnings is lower than normal due to the Coronavirus outbreak until 12th November 2020.

If you receive a payment from the Self Employment Income Support Scheme this will be taken into account as earnings for the Monthly Assessment Period in which it is received, meaning any UC awarded before that is safe and will not be recovered.

If you are not already getting any help with your Council Tax Bill - make a claim for Council Tax Support


I’m a self-employed taxi driver. I’m single, live alone and don’t currently claim any benefits. 
I have diabetes – so I have stopped work as I feel at risk from the Coronavirus. My friends are currently doing my shopping for me.
I do have personal savings of £10,000, but I’ve been told that I might be able to claim Universal Credit?


Yes, you can make a new claim for Universal Credit. The savings limit for Universal Credit is £16,000. This first £6,000 of your savings are totally ignored. Any savings between this and £16,000 will affect how much you get - but if you have no other income, or not much income, then you will still receive some Universal Credit.

You will need to agree to a claimant commitment. You may be expected to look for work, but the government have said that work coaches should be reasonable, taking into account people's personal circumstances and their local jobs market - so do explain your health conditions and your concerns about working to your Work Coach.

If you have been trading 12 months or more then the Minimum Income Floor would normally apply - even during periods of temporary ill health / absence, but your work coach can use their discretion not to apply the Minimum Income Floor as your ability to work has been affected by the Coronavirus outbreak - so your UC award should be based on your nil earnings. This can apply up to 12th November 2020.

Watch out for 'to do' tasks on your journal / text and agree to your claimant commitment within 7 days, if you miss the deadline your claim for UC will fail.

If you receive a payment from the Self Employment Income Support Scheme the this will be taken into account as earnings for the Monthly Assessment Period in which it is received meaning any UC awarded before that is safe and will not be recovered.

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