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Minumum income floor (self employment)

Debbie Witton
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Senior welfare rights officer - Salford City Council Welfare Rights Service

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Any views on the number of hours x minimum wage a single healthy self employed person will be assumed to be earning after 12 months in business for calculating notional income?

To determine what is gainful self employment, draft UC reg 57 (2) says that “the trade, profession or vocation is a claimants main employment where the claimant spends MORE THAN HALF of the expected number of working hours engaged in carrying out that trade, profession or vocation”.

So if a single healthy person is doing 35 hours of self employment and after 12 months not earning anything, would their minimum income floor be calculated using 18 hours or 35 hours x min wage?

Would they be treated as working for 18 of their expected number of hours in self-employment and then have to meet work-requirements to get alternative paid employment for the remaining hours?

Andrew Dutton
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Welfare rights service - Derbyshire County Council

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Hello. This is making my head ache too.  Have you seen the stuff on the low Income Tax Reform Group’s website? They are pointing out many and varied potential problems for the self-employed and there may be something helpful here.

http://www.litrg.org.uk/Resources/LITRG/Documents/2012/08/SSAC_-_universal_credit_and_related_regulations_0712_(final).docx.pdf

http://www.litrg.org.uk/Resources/LITRG/Documents/2012/09/LITRG evidence to W_P Committee inquiry into UC implementation 170812 (final) docx.pdf

[ Edited: 25 Oct 2012 at 12:19 pm by Ros ]
LITRG
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Low Incomes Tax Reform Group

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Debbie Witton - 24 October 2012 11:06 AM

Any views on the number of hours x minimum wage a single healthy self employed person will be assumed to be earning after 12 months in business for calculating notional income?

To determine what is gainful self employment, draft UC reg 57 (2) says that “the trade, profession or vocation is a claimants main employment where the claimant spends MORE THAN HALF of the expected number of working hours engaged in carrying out that trade, profession or vocation”.

So if a single healthy person is doing 35 hours of self employment and after 12 months not earning anything, would their minimum income floor be calculated using 18 hours or 35 hours x min wage?

Would they be treated as working for 18 of their expected number of hours in self-employment and then have to meet work-requirements to get alternative paid employment for the remaining hours?

It might not be the hours x NMW, during the debates it was mentioned that the MIF would be set by looking at similar employed people with similar circumstances.

However, i would have thought it would be roughly the full 35 hours, my understanding is that the MORE THAN HALF requirement is only used in establishing whether they are in gainful self-employment and whether the MIF applies. It is then the earnings that are compared the MIF level rather than the hours worked. At least that is my interpretation of it all so far, although DWP haven’t released a huge amount of detail.

The claimant can opt for the MIF not to apply at all if they choose to accept the conditionality regime. This is what we are currently looking at.

As Andrew has noted, we have lots of concerns generally about self-employment and UC.

Victoria
LITRG