Universal Credit changes to hit self-employed hard 

Your monthly Universal Credit payment may decrease soon if you are self-employed. This is a result of the reintroduction of the minimum income floor and the gainful self-employment tests.  

Universal Credit staff can start to apply the "minimum income floor" to any person it believes to be in gainful self-employment from August 2021.  

This change could cause a big reduction in income for certain people. You should speak to your work coach urgently if 

• you are claiming Universal Credit, and 
• you are self-employed, and 
• your business has not fully recovered from the impacts of the pandemic.  

What is the minimum income floor? 

The minimum income floor is a figure that Universal Credit can use instead of your actual earnings if you are self-employed. 

It is based on what you would earn if you had a job paying national minimum wage. The actual figure depends on your circumstances. 

Universal Credit assumes you earn at least this amount every month. If your business earned less, they will use this figure instead of your actual earnings. This means you get less money in your payment.  

The government accepts that it can take a while for a business to become profitable.  And so, the policy does not apply during the first 12 months of a new business. 

This policy was suspended as part of emergency measures to deal with the coronavirus pandemic. But, new regulations mean Universal Credit staff can start to reapply it from 31 July 2021.  

What if your business's performance is still affected by COVID-19? 

If your business is still affected by government restrictions, your work coach can choose to 

• Use a lower figure, including £0, as the minimum income floor 
• Delay deciding that you should be treated as being self-employed 
• Decide you do not have to look for work  

The work coach can only make these changes to your claims for 2 months at a time. The work coach can make this kind of decision 3 times in total. This means you could still be exempt from the minimum income floor for up to 6 months.  

Get advice if you are getting Universal Credit and you are struggling to manage. Contact our helpline if you’re worried about paying your rent or mortgage, or if you have any other housing problem.

Take a look at our upcoming training courses if you're an adviser who would like to learn more about Universal Credit.