The Coronavirus outbreak has had a huge impact on many self-employed workers.
Special measures have been introduced by the government for UC claimants:
- Since 13th March 2020, self-employed claimants who are having to self-isolate have been excluded from the Minimum Income Floor for any Monthly Assessment periods during which they have been in self-isolating.
- From 6th April 2020, the Minimum Income Floor is not applied. This change applies to all Universal Credit claimants and lasts for the duration of the outbreak. This extra measure is in recognition of self-employed workers who see a drop in self-employed earnings.
- From 31.7.21 the Minimum Income Floor will be re-started for many UC claimants - this could affect claimants from September 2021 (or later).
Claimants who have had the MIF easements applied will be interviewed to check if they continue to be in ‘gainful self-employment’. If the DWP decide that they are gainfully self-employed, the MIF will be applied again, from the monthly assessment period (MAP) after the MAP in which the decision is made about gainful self-employment.
For those claimants who were part-way through their 12-month ‘start-up period’ in March 2020, the clock was paused when the pandemic hit. Once the DWP have checked and decided that these claimants are still classed as in ‘gainful self-employment’, the clock can re-start. Once they have served the remainder of their 12-month ‘start-up period’, the MIF will apply to them too.
Some easements remain in place until 31 July 2022.
Anyone who can demonstrate that their business remains adversely affected by the pandemic can have their MIF reduced to zero. This will be at the discretion of the Work Coach and can only be for up to two consecutive MAPs when the situation would be reviewed. The maximum period for easements would be six months in total (3 x 2 MAPs).
If economic conditions have sufficiently improved, the Work Coach could decide to remove the easement before it was due to expire.
Things to consider:
- Self-employed workers who are self-isolating are not eligible for SSP, but they might be entitled to New Style ESA if they satisfy the National Insurance contribution conditions.
- If they are already claiming Universal Credit, the amount of NS-ESA will be taken into account as unearned income when their UC is assessed.
- If they are already claiming Working Tax Credit, this can continue whilst they are self-isolating or sick for up to 28 weeks.
- If they are able to work but work has dried up and they are no longer working the number of hours per week required to qualify for Working Tax Credit, the WTC award can continue for 4 weeks.
- Some Tax Credits claimants might be advised to claim Universal Credit instead, but they should get specialist advice to check if they would be better off remaining on their current benefits.
- A claim for Universal Credit would bring any Tax Credit award to an end.
- They need to consider if they would be better off or worse off in the longer term. If the self-isolation period is just a couple of weeks, they might be best off remaining on their Tax Credits in the longer term.
- Advice should be sought from a benefits adviser.
- If they are not currently claiming any benefits, they might be entitled to some Universal Credit, depending on their circumstances.
- Many self-employed workers will receive a lump sum payment from the Self-Employed Income Support Scheme. This should be treated as income for the Assessment Period in which it is received.