Extra welfare support for the self-employed

The Minimum Income Floor (MIF) for self-employed Universal Credit claimants will remain suspended until the end of April 2021, it has been announced.

The temporary suspension was initially introduced in March 2020 and was due to expire on 12 November 2020. It had been promised by the government that the MIF suspension would last for the duration of the Covid outbreak.

The MIF suspension allows the self-employed people to continue to receive Universal Credit based on their current actual earnings, providing a safeguard for those who have seen a drop in earnings due to the impact of Covid 19.

It means they can continue to access Universal Credit in full at a rate equivalent to Statutory Sick Pay for employees. 

Claiming universal credits may also unlock other benefits such as free school meals, a reduction in council tax and help with prescription costs and dental treatment.

The Institute of Fiscal Studies has estimated that the MIF affects around 450,000 households who lose an average of £3,200 a year from the assumption that they earn as much as full-time employees on the minimum wage.

The number of people claiming Universal Credit has increased from 2.7 million in December 2019 to 5.6 million in July 2020, the most recent month for which figures are available.

Further help

The extension to 30 April 2021 comes after the Chancellor also announced an improved grant for the self-employed under the Self-Employed Income Support Scheme (SEISS) and extended time limits for applying for a bounce back loan.

As regards Universal Credit claims, grants from the SEISS are treated as income in the usual way.

Check out our Business after COVID-19: Transition Knowledge Hub for more guidance and advice on managing the pandemic.