Universal Credit for the self-employed – how business assets affect claims and payments
Universal Credit is being applied for at an unprecedented rate at the moment and is likely seeing a lot of demand from the self-employed. Those working for themselves are struggling at the moment and while the Self-Employment Income Support Scheme will help some, there are many who will not qualify for it.
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Some self-employed individuals may have no choice but to apply for Universal Credit and they will face different rules than regular claimants.
Universal Credit payments are usually dependent on the claimant’s earnings.
However, for self-employed claimants the payments will be calculated based on combined income from the self-employed work and any potential income from regular employment.
While all claimants will need to keep the state up to date with any changes in their circumstance, self-employed claimants will also need to report any changes in their business operations.
Self-employed people will need to report a number of changes in circumstances, with the following being some examples:
- A closing of the business they run
- If they start a different kind of business/operation
- If they take a permanent job elsewhere
- If they’re no longer able to work
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There is also another consideration which may worry some self-employed claimants.
Currently, people with more than £16,000 in savings cannot receive Universal Credit at all.
Claimants with between £6,000 and £16,000 in savings will be able to receive payments but they will be reduced.
Self-employed individuals may worry if the assets they have for their business (such as machinery or equipment) will also negatively impact their benefit payment.
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Thankfully, business assets will not be considered when calculating the amount a claimant will receive.
As understandinguniversalcredit.gov.uk detailed: “If you are not winding-up your business, you will not need to sell your business assets to apply for Universal Credit.
“They will not be taken into account when you make a Universal Credit claim, nor will they be considered when we work out how much Universal Credit you are to entitled to.
“Business assets include things like machinery, premises and cash held in your business account.”
The government have made changes to the Universal Credit system in recent months to accommodate struggling workers.
The self-employed benefits from some of these changes as the minimum income floor was temporarily abolished.
In the March 2020 budget, Rishi Sunak confirmed the following changes, with many additional updates being made in the following months: “To make sure that time spent off work due to sickness is reflected in your benefits, I’m also temporarily removing the minimum income floor in Universal Credit.
“And I’m relaxing the requirement for anyone to physically attend a jobcentre; everything can be done by phone or online.
“Taken together, these measures on ESA and Universal Credit, provide a boost of almost £0.5bn to our welfare system.”
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