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

Self Employed Income Support Scheme

Most self-employed workers will be able to claim a grant from the Self Employed Income Support Scheme - click here. And in Scotland those whose businesses were set up too late to qualify will be eligible for a £2000 grant.

But because the grant was not expected to be paid until early June, many self-employed workers have made a claim for Universal Credit.

We now know that the payment will be made between 13th May (when the scheme opens to applications) and 25th May.


Already getting Universal Credit?

 

Someone who is self employed, is currently in receipt of Universal Credit and whose takings have dropped will have that drop in income taken into account when their UC is next assessed. 

They should continue to report their income and allowable expenses to the DWP as normal, even if they are reporting a loss.

They should let their Work Coach know what is going on as soon as possible and if their hours have also dropped they may have to agree to a new Claimant Commitment.

If they are going to struggle until they receive their next UC payment, they can request a Change in Circumstances Advance.

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 can be offset against it - as long as the claimant is reporting any income and allowable expenses to the DWP.

From the understandinguniversalcredit.gov.uk website:

'The Self-employment Income Support Scheme will be treated as earnings in Universal Credit. Your Universal Credit payment will adjust in response to changes in your earnings.'

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).
If the claimant has been reporting a loss every month up to then, this can be offset against the grant and only the difference will be treated as earnings. 
But for some it may mean that the claimant's UC award reduces to nil (meaning they will need to reclaim) and/or the 'surplus earning' rules may then apply.

BEFORE making their application, the claimant should consider the impact of the payment on their UC award, it may be worth them delaying making the claim for the SEISS.

For example, if their UC Assessment Periods run from 20th of one month to 19th of the next, then if they apply on 13th May, they may receive their payment on or before 19th May and so the DWP would include the payment in their April 20th - May 19th Assessment Period, whereas if they wait and apply for the payment on 20th May, then they will receive the payment in the following Assessment Period, meaning an extra month's Universal Credit.

Click here for more on the Self Employed Income Support Scheme.

IMPORTANT: Self-employed UC claimants should report their income and allowable expenses every month even if they are making a loss. These losses can then be offset against any grant they receive from the Self Employed Income Support Scheme.


New Regulations from 21 May 2020 confirm that:

  • The SEISS grant is to be treated as self employed income (a ‘receipt’) for the monthly assessment period during which it is received.
  • Any grant or loan payment made to a self employed person to meet expenses or losses due to the Coronavirus pandemic 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 therefore is disregarded as income in their own UC claim.

 

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.


Minimum Income Floor

The Social Security (Coronavirus) (Further Measures) Regulations 2020 took effect from 30th March and replaced the previous Minimum Income Floor measures announced.

They give the DWP the discretion to:

  • Treat a claimant's Minimum Income Floor level as if it was a lower level - including zero
  • Delay making a decision on whether a claimant is in gainful self-employment
  • Treat a claimant who is in gainful self-employment as not being
  • Extend a claimant's start-up period for as long as they consider appropriate, or
  • Exempt a claimant who would normally fall in the 'all work related requirements' conditionality group from any work search requirement or a work availability requirement. 

This measure will be in place until 12th November 2020.

This means that regardless of how long a self-employed person has been trading, their UC award can be based on their actual takings (if they have any).



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.


Frequently Asked Questions

I've been told I'll only get £95.85 a week on Universal Credit - how am I going to manage?

Many headlines are stating that the only help available for the self-employed affected by the Coronavirus is £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 really worried about how they are going to live and pay the rent for her home (£134 a week) if she only gets £95.85 a week from the government as she doesn’t have any savings or business reserves?
Dianna will be able to make a new claim for Universal Credit. She will receive £1271.80 a month (the equivalent of £293.49 a week) before any deductions eg to pay back an Advance Payment.

If she receives a payment from the Self Employment Income Support Scheme we expect this to 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've had to shut up shop due to the Coronavirus outbreak and I can’t see that I’ll have much work in the coming weeks. My partner does not work and we don’t have any savings. We do get some Universal Credit. What should we do?

Let your Work Coach know and 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. So for the duration of the Coronavirus outbreak, 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 receive a payment from the Self Employment Income Support Scheme we expect this to 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.

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’ve been working full-time for the last couple of years as a self-employed beautician. A lot of my regular customers have cancelled their bookings and my work has suddenly dried up.
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).

If you are not due any large payments from customers, you’re probably best claiming UC online as soon as possible. You’ll not need to attend the JobCentre, 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. So for the duration of the Coronavirus outbreak, 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 we expect this to 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 

I’m 60 and work as a self-employed plumber/odd job man and have done so for several years. I’m not currently claiming any benefits. My 24 year-old nephew lives with me, he is unemployed and is on Universal Credit. My nephew started with a cough last week, so I have been self-isolating since then. When I can go out again after 14 days, I will only be allowed to do emergency plumbing work during the 'lockdown'. I can't manage financially, what should I do? 

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. 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 it should include a work allowance. 

You will need to report your income and expenses to the DWP on a monthly basis - it is importnat 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.

If you receive a payment from the Self Employment Income Support Scheme we expect this to 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 savings of £2,000, but I’ve been told that I might be able to claim Universal Credit?


Yes, you can make a new claim for Universal Credit. And savings below £6,000 are totally ignored.
You will need to agree to a claimant commitment. Because you are not required to self-isolate it could be that you are not treated as having a Limited Capability for Work. At the moment, the government is advising ‘social distancing’ for those with certain health conditions – which is what you are doing. But this is not the same as ‘self-isolation’.

However, you should not be expected to look for work, because work search requirements are suspended due to the Coronavirus outbreak.

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.

Watch out for a 'to do' tasks 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 we expect this to 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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