Universal Credit

Universal Credit is a social security benefit for people on a low income or out of work

Universal Credit aims make people better off in work than on benefits.

Universal Credit replaced the following benefits:

  • Jobseekers Allowance
  • Housing Benefit
  • Working Tax Credit
  • Child Tax Credit
  • Employment and Support Allowance
  • Income Support

Impact on self employment

If you are self employed you can claim Universal Credit to increase your earnings if they are very low. Universal Credit is not designed for self employed people. This can make it harder for self employed people to get a regular income from Universal Credit.

The calculation assumes that you work full time, 35 hours each week. It also assumes that you earn at least the national minimum wage. This is often not how self employment works for artists. Many artists work on a daily rate or a longer term project that is below the national minimum page.

You need to make a report online each month of your income and expenses. This is quite complex and takes a lot of time.

Self employed people often have different income and expenses each month. Payments cannot be changed to take this into account.

Universal Credit calculation

There are 3 steps to calculate Universal Credit:

  1. The basis of Universal Credit is a standard allowance. It will be higher if:
    • you have children,
    • you are disabled,
    • you have caring responsibilities,
    • you need help with certain types of housing cost.
  2. The standard allowance will be reduced depending on your income. Things that will reduce your standard allowance are:
    • savings and capital,
    • other benefits you receive,
    • other income like a pension
  3.  Payments are lower again because of:
    • the benefits cap (a limit on the total amount of benefit you can get),
    • if you got too much in previous benefits,
    • some debt repayments.

Potential problems for self employed people

Specific information is available for self employed people.For Universal Credit they will ask how much your earnings are every month. This is only the money you have get paid and does not include money that someone owes you for work. Regular employees get the same amount each month. Self employed people usually do not get paid the same each month. If someone pays you late you may get a different amount of Universal Credit. You also report on your expenses. You might pay some expenses once a year, like professional memberships or subscriptions. This also changes the payment you might get.

You need to register with Her Majesty’s Revenue and Customs (HMRC, the tax office) to claim Universal Credit. You have to fill in a monthly report on your income and any changes in your circumstances.

They will work out your ‘minimum income floor’ like this:

  • Number of hours you expect to work
  • Multiplied by national minimum wage
  • Multiplied by 52 then divided by 12 to give a monthly figure
  • Take off income tax and national insurance

If you earn less than the minimum income floor you do not get extra money. They tell you instead to find more work or ask employers to pay a part of your fee monthly instead. Income is not averaged through the year. If you earn no money in a month you still get the same low amount of Universal Credit.

You may be eligible for extra support for the first 12 months after you register as self employed. During this start up period they will use your monthly earnings to work out your Universal Credit. The minimum income floor will not apply for this time. You’ll also receive support from a work coach who’s trained to work with the self employed.

You need to show that you’re still self-employed and taking steps to build your business.

The Citizens Advice Bureau has more information on Universal Credit.

Local Welfare Assistance

Some people can get low levels of extra support through a Local Welfare Assistance scheme. Local councils fund Local Welfare Assistance. It will not provide money. Local Welfare Assistance supports people by providing essential things like:

  • Food vouchers
  • AllPay cards
  • Recycled furniture
  • Kitchen appliances

There is no specific budget for these schemes, so the amount of support is low. Different councils operate the scheme in different ways.

Search for your local council with ‘local welfare assistance’ to find out if you can apply.

Local Council Tax Support

Local Council Tax Support lowers your Council Tax bill by around 30%-100%. Different local councils operate the scheme in different ways. Many councils also offer discounts to:

  • lone parents with children under five,
  • disabled people,
  • households affected by the benefit cap.

Search for your local council with ‘local council tax support’ to find out if you can apply.

Discretionary Housing Payments

Discretionary Housing Payments help with housing costs. The money comes from your local council. You are eligible if:

  • you get Housing Benefit or
  • support for housing costs as part of Universal Credit and
  • that support does not cover your rent.

Search for your local council with ‘discretionary housing payments’ to find out if you can apply.

Talk to the Citizens Advice Bureau for more information on benefits.


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