Example:
Alan is a self-employed bathroom and kitchen fitter. He lives alone in a rented flat. His worked dropped off due to the Coronavirus outbreak.
He stopped working altogether in early March.
He has no other income or savings, so he made a claim for UC on 16 March.
He made an application for the Self Employed Income Support Scheme and received his payment on 25th May.
His UC is calculated as follows:
MAP 16 March – 15 April
He reports no s/e income but reports losses of £250 (vehicle service, MOT, insurance etc)
His UC award is calculated as follows –£411.51 standard allowance + housing cost element £450 = £859.89 Maximum UC
Assessable income = nil
Less deduction to recover new claim advance £50
UC award = £809.89
MAP 16 April – 15 May
He reports no s/e income but reports losses of £50 (insurance)
His UC award is calculated as follows –£411.51 standard allowance + housing cost element £450 = £859.89 Maximum UC
Assessable income = nil
Less deduction to recover new claim advance £50
UC award = £809.89
MAP 16 May – 15 June
He receives a SEISS payment of £4800 on 25 May
He reports s/e losses of £50
His UC award is calculated as follows – £411.51 standard allowance + housing cost element £450 = £859.89 Maximum UC
Assessable income = £4800 minus losses for this MAP and unused losses for previous MAPs of £350 = £4450 x 63% = £2803.50
UC award = nil
MAP 16 June – 15 July
The DWP treat Alan as making a new claim for UC.
He reports no s/e income but reports losses of £50 (insurance etc)
His UC award is calculated as follows –£411.51 standard allowance + housing cost element £450 = £859.89 Maximum UC
Although there is no s/e income reported in this MAP, Alan has ‘surplus earnings’ of £585.10 which are carried over from the previous MAP (see below how this is calculated).
The losses for this month are offset against the surplus earnings – bringing the earned income figure down to £535.10
£535.10 x 63% = £337.11
Max UC £859.89 minus earned income £337.11
Less deduction to recover new claim advance £50
UC award = £472.78
Surplus earnings calculation
Alan had ‘surplus earnings’ in the previous MAP because his net earnings of £4450 (the SEISS grant £4800 minus losses £350 ) were above his ‘relevant threshold’.
His ‘relevant threshold’ is £3864.90 – this is calculated as follows:
£2500 + (Maximum UC – unearned income) x 100 / 63 + work allowance.
So for Alan the calculation is:
£2500 + (Maximum UC £859.89 – unearned income - nil) x 100 / 63 + work allowance (nil)
ie £2500 + £1364.90 = £3864.90
Alan's earned income above his threshold was £585.10 (£4450 minus £3864.90) these are his ‘surplus’ earnings.
MAP 16 July – 15 August
He reports no s/e income but reports losses of £50 (insurance)
His UC award is calculated as follows –£411.51 standard allowance + housing cost element £450 = £859.89 Maximum UC
Assessable income = nil
Less deduction to recover new claim advance £50
UC award = £809.89