Coronavirus: the Self-Employed and Universal Credit

We wrote previously that rather than provide a similar grant based scheme for self-employed people, such as the Job Retention Scheme for employed people, some commentators think it could be easier to relax the rules on means-testing under Universal Credit or to make contributory benefits, which might be open to some self-employment people, more generous.

Since then, the Self-Employed Income Support Scheme has of course been announced. However, there are still many Self-Employed people who don’t qualify for this support, whilst those who do qualify will have to wait until June for their first payment.

So, in order to bridge this income gap, as well as asking your bank for a short-term overdraft facility, could you also access financial support through an improved Universal Credit system?

Recap from our earlier newsletter

What if I am self-employed and receiving Universal Credit?

If you are self-employed and receiving Universal Credit and you have COVID-19 or are advised to self-isolate, the requirements of the Minimum Income Floor will be temporarily relaxed. This change took effect on 13 March and will last for the duration of the outbreak, to ensure that self-employed UC claimants will receive support.

If you need to claim Universal Credit but have COVID-19 or are self-isolating, you will now be able to claim and to access advance payments upfront without needing to attend a Jobcentre Plus. Please visit for more information.

What is available now:

You can apply for Universal Credit if you are on a low income, or unemployed.

From 6 April the government is increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for one year. Both will increase by £20 per week on top of the planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants, so potentially the self-employed sector.

This means that for a single Universal Credit claimant (aged 25 or over), the standard allowance will increase from £317.82 to £409.89 per month.

From April 2020, Local Housing Allowance rates will also be increased to the 30th percentile of market rents. This will apply to all private renters who are new or existing Universal Credit housing element claimants, and to existing Housing Benefit claimants.

If you are self-employed and claiming Universal Credit, and are required to stay at home or are ill as a result of Coronavirus, the Minimum Income Floor (an assumed level of income) will not be applied for the period of time whilst you are affected.

From 6 April 2020, the requirements of the Minimum Income Floor will be relaxed temporarily. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak. New claimants will not need to attend the Jobcentre to demonstrate “gainful self-employment”.

See more details here:

The general criteria for demonstrating ‘gainful employment’ (as published before COVID-19) were as follows:

If you are self-employed Universal Credit will provide support to help you grow your business.

To get this support you will need to be able to show that:

  • Self-employment is your main job or your main source of income;
  • You get regular work from self-employment;
  • Your work is organised – this means you have invoices and receipts, or accounts;
  • You expect to make a profit;
  • If you can show all these things, you will be considered to be ‘gainfully self-employed’. If you can’t show all these things, you might have to look for other work if you are to keep receiving Universal Credit.

It is assumed that you are earning the same amount as someone like you who is in paid work. This will usually be what someone of your age would earn if they worked at the National Minimum Wage for the number of hours that you are expected to work, or look for work. This amount is called the Minimum Income Floor.

If you earn less than the Minimum Income Floor, Universal Credit will not make up the difference. You may need to look for additional work to top up your income.

If you earn more than the Minimum Income Floor, your Universal Credit payment will be based on your actual earnings.

For further information or advice on any of the issues raised, please call us on 01225 325580, email, or contact your usual client director.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (3 April 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.