Ony £94.25 available to the self-employed??

Note - this topic was written on 25th March 2020. The government may be making an announcement on 26th March about further support that may be available for the self-employed.

Current position
Many headlines are stating that the only help available for the self-employed affected by the Coronavirus is £94.25 per week. We have received a number of queries from people concerned that if someone only has £94.25 to live on they will be unable to pay their rent.
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 though about doing on-line orders but doesn’t think there will be many takers. She lives in a 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 her rent (£134 a week) – how is she going to pay that if she only gets £94.25 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. From April* she will receive £1271.80 a month (the equivalent of £293.49 a week) before any deductions eg to pay back an Advance Payment.
*As she will make her claim for UC before 6th April 2020, her first payment will be assessed on 2019/2020 rates and so be approximately £100 less.

So where does the idea that it’s just £94.25 a week come from?

The £94.25 comes from the fact that on 20th March 2020, The Chancellor Rishi Sunak made a statement on Coronavirus. In it he said that 'every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.’
He was referring to the fact that there had been a lot of criticism that self-employed claimants could not access Statutory Sick Pay- worth £94.25 a week – as it is paid by employers to their employees.

What the government is actually doing is:
• suspending the Minimum Income Floor (see below) for all self-employed UC claimants from 6th April 2020 and
• increasing the basic rate of UC – the Standard Allowance – by £20 a week, to £409.88 a month.
and they maybe annoucing further help.

However a self-employed person could still get additions for housing costs, children and partners in their UC calculation – as well as additions if they (or a partner) are a carer or have a Limited Capability for Work and Work Related Activity.

As Universal Credit is a means tested benefit it will take into account any income (e.g. partner’s earnings) that the claimant/s has and will calculate the top-up for that family in the same way as any other applicant.

If the claimant is due any large payments from customers, then it may be better for them to delay making their claim for UC – they should seek advice from a Benefits Adviser.

Minimum Income Floor
The Minimum Income Floor (MIF) normally affects those self-employed claimants who are in the ‘all work requirements group’ and have been trading for 12 months or more. It means that the minimum income that is used when working out their UC award is the monthly equivalent of their applicable minimum wage for the amount of hours they would be expected to work. And the Minimum Income Floor would have been applied to those self-employed claimants who were not wanting to close their business but who were experiencing a significant drop in income.
The government have already suspended the Minimum Income Floor for those self-employed workers self-isolating or who have the virus, and from 6th April 2020 the Minimum Income Floor will be suspended for everyone. For those already on UC the new rules will apply from the beginning of the first Assessment Period that begins on or after 6th April 2020.

This is a temporary measure that will last for the duration of the outbreak.

Already on Tax Credits?
Where a self-employed claimant is already on Tax Credits* (and/or Housing Benefit) then they may be able stay on these benefits and can be better off. But if their Tax Credits stop, or they are struggling financially, then they may be better off claiming Universal Credit. If they do decide to claim Universal Credit, then it could be that delaying their date of claim could be beneficial. They should seek advice from a Benefits Adviser.

*If a self-employed person was already receiving Working Tax Credit (WTC), then WTC rates have increase by £1040 per year - please see the briefing. If they are sick then WTC can continue for 28 weeks; if not sick, but working less hours, then WTC may cease. 

Council Tax
Anyone making a new claim for Universal Credit should be advised to make a new claim for Council Tax Support from their Local Authority at the same time.

More information
Please also see our Coronavirus pages (under development) click here  and our Coronavirus Briefing click here for more in depth consideration of Coronavirus and benefits.