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  • LHA/Universal Credit

    Universal Credit punishes the self-employed



    The system of monthly income assessments used to determine Universal Credit (UC) punishes the self-employed and should be scrapped in favour of yearly calculations, IPSE, the Association of Independent Professionals and the Self-Employed, has said today.

    The call comes after a new report released today by the Commons Work and Pensions Committee – ‘Universal Credit: supporting self-employment’ – highlighted that the current monthly system “fails to deliver parity of treatment between employees and the self-employed.”

    IPSE has welcomed the report, and is particularly pleased that the Committee has listened to evidence it provided in January this year, emphasising that UC unfairly creates problems for the self-employed.

    Under UC’s monthly Minimum Income Floor (MIF) calculations, “self-employed people can miss out on important support not because their income is inadequate, but because it is volatile”.

    To address this problem, the report takes up two of IPSE’s recommendations.

    First, it calls for a significant extension of the monthly MIF period – up to a year – to help account for fluctuating incomes.

    The report also calls for an extension of the ‘start-up period’ built into Universal Credit. Currently set at one year, this is the period new businesses are excluded from the MIF to allow them to get themselves off the ground. Taking up IPSE’s recommendation, the report calls for extensions of the period to up to three years to give many self-employed people the time and space they need to get their businesses going.

    Evidence before the Committee suggested that some self-employed people were up to £3,000 worse off than employees on a similar income because of the monthly calculations. 

    Chris Bryce, IPSE CEO, commented: 

    This report is welcome news for IPSE and all self-employed people. Universal Credit has united businesses, unions and the self-employed in opposition against the way the system treats independent professionals: Universal Credit just doesn’t work for freelancers and the self-employed.


    “Monthly income reporting requirements punish self-employed people because they fail to account for the uneven nature of their income – something the report rightly said was an ‘entirely normal feature of self-employment’.

    “Why, for example, should a farmer who sells or produces crops only at a particular time of year, be penalised?


    “The system of monthly reporting must be relaxed to ensure the self-employed – who have helped keep unemployment at record lows – receive the support they need. 

    “Giving self-employed people more time to get their enterprises up and running before the income assessments kick in would also be a welcome pro-business move. 

    “It is truly heartening to see the Work and Pensions Committee not only citing us repeatedly, but also taking up our main recommendations to make this creaking system actually work for the self-employed. Now we hope Government will take heed of what the Committee is telling them and finally use Universal Credit to give vulnerable self-employed people the support they need.”

    SEE ALSO  -      What causes homelessness in the UK?

    UP NEXT -          The true impact of Universal Credit
                
    DON'T MISS -     Universal Credit-A TOTAL DISGRACE

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    No-one should ever be treated as earning income they haven't (allowing for fraud etc), to do so is nothing short of immoral and a disgrace that this has been resorted to.


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    Specialist Council Tax advisor (A.Inst.Pa) based in Gateshead, but working nationally for landlords and council tax payers.
    http://www.lgfa92.co.uk
    Posting as @CouncilTaxGuy on Twitter
    Why not look at our blog at http://www.lgfa92.co.uk/blog

    Any posts are my own opinion on legislation and may vary from your local authorities !

    Totally agree...........................so why are sole trader LL with mortgages being taxed on fictitious income! !!??

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    I have personally heard of one gentleman who had a small business.  DWP made out he was earning more than he was and cut his benefits, forcing him to close down his business.  He was devastated by this.

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    It's a shame. I can understand them deeming minimum wage for the hours worked but to assume 33 hours per week for everyone...

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    Specialist Council Tax advisor (A.Inst.Pa) based in Gateshead, but working nationally for landlords and council tax payers.
    http://www.lgfa92.co.uk
    Posting as @CouncilTaxGuy on Twitter
    Why not look at our blog at http://www.lgfa92.co.uk/blog

    Any posts are my own opinion on legislation and may vary from your local authorities !

    The Government’s refusal to change its position on monthly calculations for Universal Credit payments will continue to unfairly punish the self-employed, IPSE (the Association of Independent Professionals and the Self-Employed) said today.

    The Government ruled out making changes to the system of monthly calculations in its response released today to the Work and Pensions Committee ‘Universal Credit for the Self-Employed’ report.

    IPSE’s Policy Development Manager, Jordan Marshall, comments:

    “It is disappointing that the Government hasn’t listened to the repeated warnings of industry, trade unions and the self-employed themselves about the damage monthly reporting does to self-employed people claiming Universal Credit. 

    “Just last month the National Audit Office said the self-employed ‘lose out due to monthly reporting’.

    “By not considering the fluctuating nature of self-employed income, the Minimum Income Floor can leave the self-employed up to £3,000 worse off each year compared to an employee earning the same amount. 

    “One welcome move is the Government’s plans to increase the number of specialist Work Coaches to give self-employed claimants more focused advice on growing their businesses.

    “The Government has agreed to review the impact Universal Credit has on the self-employed, but not until the end of 2019. This will be cold comfort to the many who are struggling in a system that is not fit for purpose”.  

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