How Universal Credit is ‘failing’ self-employed people.
Universal Credit for self-employed people works on the basis of a “minimum income floor” (MIF).
What is the Minimum Income Floor? This assumes that self-employed people work 35 hours a week and earn the minimum wage, although this is adjusted depending on circumstances such as dependants and disabilities. To calculate how much Universal Credit an individual should be awarded, the Department for Work and Pensions (DWP) compares their real earnings with the MIF. If they earn below the MIF, the DWP treats individuals as though they have earned the MIF. If they earn above the MIF, the DWP takes into account a person’s actual earnings instead.
Why would someone earning £1,092 (The standard calculated MIF) be claiming Universal Credit if they didn’t need financial assistance?
When I personally first started claiming Universal Credit I was happy with what was initially shown to me. I was told Universal Credit would top up my income if I needed it on quieter months. But that wasn’t the case when the first payment was set to hit my account I ended up with a payment of £0 and 0p. And this nearly cost me my home and my mental health took a sharp decline as a result.
The major problem with claiming Universal Credit and being self-employed at the same time is the ‘MIF’. There is this assumption that a level of income is happening from any self-employed business. And also the lack of personalization is shocking. If they took your business into account and tailored the Universal Credit Claim to work around this it may just work. For example; A Freelance Graphic Designer isn’t going to be earning the same as A Landscape Gardener.
What are your experiences with Universal Credit? Let me know in the comments below!