Hundreds of thousands of self-employed to be impacted by Universal Credit changes

The IPSE is urging the government to either scrap or extend the start-up period of Minimum Income Floor (MIF) for Universal Credit.

The Association of Independent Professionals and the Self-Employed (IPSE) warns that the government’s reinstatement of the MIF could have a negative impact on at least 200,000 self-employed professionals across the UK.

The MIF, which previously restricted the Universal Credit entitlement for those on low incomes had been suspended during the pandemic – IPSE research shows that during this time period there was a 341% rise in self-employed making Universal Credit claims.

Andy Chamberlain, Director of Policy at IPSE, said, “Universal Credit has been an essential lifeline to hundreds of thousands of freelancers during the pandemic – especially those excluded from the government’s SEISS grants. Although we understand that as the economy opens up, government must adjust its support schemes, it should not start by pulling the rug from under the worst-hit self-employed.”

Chamberlain added, “The Minimum Income Floor unfairly stopped self-employed people accessing Universal Credit before the pandemic because it did not account for freelancers’ naturally volatile incomes. Rather than looking at the actual earnings of self-employed claimants, it assumed they were making a base level of profit, which in many cases was false. Government rightly removed this impediment during the pandemic – and extended the suspension earlier this year. But now is not the time to reintroduce the MIF: many freelancers are still in dire financial straits and need this ongoing support.

“We urge government to scrap the MIF so struggling freelancers can continue to get support. Or, at the very least, government should extend the ‘Start-Up Period’ when MIF does not apply from one year to three, allowing newer freelancers – who are often the most financially fragile – a bigger grace period to get their businesses off the ground. The economy may be opening up, but for many hard-hit self-employed people, it will be a long time before they are in a stable financial position again: government must give them that time and help these freelancers to keep their businesses afloat.”

To find out more about contracting please contact Jaime on 01206 591 000 or email jaime.thorpe@contractorumbrella.com.