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Forum Home  →  Discussion  →  Other universal credit issues  →  Thread

Universal Credit will be a disaster for the self-employed

 

Paul_Treloar_AgeUK
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Article by Benedict Dellot, Associate Director, Economy, Enterprise and Manufacturing with the RSA.

Combined with the monthly reporting requirement, the MIF is also likely to be detrimental to claimants with a volatile income. Someone paid in large lump sums throughout the year may in one month earn so much that they are entitled to zero Universal Credit, while in another earn very little but see no increase in their UC entitlement due to the MIF. Think of farmers, actors, builders or virtually anyone doing seasonal work.

Just compare the muted concern over UC with the uproar that surrounded the planned rise in National Insurance contributions for the self-employed. Economic pundits, politicans and journalists lined up to denounce the Chancellors move, presumably because the affluent had the most to lose. So where are their voices now when we need to defend the low earning self-employed from the pernicious side-effects of welfare reforms?

Universal Credit will be a disaster for the self-employed. Who is listening?

     
shawn
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Huffington Post reporting on a ‘hidden’, ‘fresh’, ‘little known’ scandal -

A “hidden” raid on the self-employed threatens to engulf the government’s Universal Credit reforms in further scandal, as hard-working traders see their incomes hit by hundreds of pounds a year.

Critics have lined up to slam changes to in-work benefits like tax credits, which are now impacting some of the 800,000 strivers who, according to an influential think tank, will eventually be required to move onto the new system.

As part of the move, little-known rules will hit sole traders, including window cleaners and hairdressers, to the tune of £1.5bn by 2022, figures from the Office for Budget Responsibility reveal, meaning it could cost some claimants as much as £1,500 a year ...

..... The growing problem revolves around an aspect of Universal Credit dubbed the “minimum income floor”.

http://www.huffingtonpost.co.uk/entry/universal-credit-clause-threatens-further-scandal-for-governments-welfare-reform_uk_59e86541e4b08f9f9edce2df

 

 

     
Jon (CHDCA)
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Both LA districts we cover have introduced a similar minimum income floor into their CTR schemes (our area is >95% full service UC). If other councils are following suit, then any assessment of the impact on self-employed claimants should really be taking that cut into account as well.

     
Daphne
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FOI request which provides guidance for applying the MIF

     
Welfare Rights Adviser
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Stop press - hidden details that have suddenly come to light were published as recently as 2013

     
Jon Blackwell
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Talking of ‘disaster for the self-employed’, as far as I can see the Surplus Earnings Regs are still due to come in from April 2018 - any signs of movement on that?

 

     
stevenmcavoy
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Jon Blackwell - 23 October 2017 04:20 PM

Talking of ‘disaster for the self-employed’, as far as I can see the Surplus Earnings Regs are still due to come in from April 2018 - any signs of movement on that?

that the one they apportion the surplus earnings over a 6 month period excluding a de minimis amount?


yeah i cant wait to have to explain that one to a client!

     
Gareth Morgan
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Welfare Rights Adviser - 23 October 2017 12:46 PM

Stop press - hidden details that have suddenly come to light were published as recently as 2013

It was actually in the White Paper in 2010.

“Income from self-employment
5. Some self-employed people under Tax Credits report very low levels of income. We know that in starting up a business that it can take some time before it becomes profitable. But once established we would expect to see a reasonable income from the business activity. So for Universal Credit we are considering introducing a floor of assumed income from self-employment for those registering as such. The floor will be set at the National Minimum wage for the reported hours; clearly profits above this limit may be received and reported. “

It’s been in my modelling since then.

     
victoriatodd
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We’ve been highlighting the issues since 2010 when it was in the White Paper, as have many others. We’ve written to Ministers on more than one occasion. WPC covered the MIF late last year recommending a review:

https://www.litrg.org.uk/latest-news/news/170503-press-release-campaigners-back-mps’-urgent-pleas-change-universal-credit

LITRG are publishing a report on this area of UC next week.

And the surplus earnings regs seem to be going ahead - worst regulations I have ever seen in terms of unfairness and complexity with no evidence that people are actually able to manipulate employed earnings in that way. And the main example justifying the need for the rules originally was of an employed person - the self-employed already get hit with the MIF and if you add the surplus earnings on then it just makes things worse.

Victoria