Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, for what reasons his Department applies the minimum income floor under universal credit to people who have already been judged by Jobcentre Plus to be in gainful self-employment.

Universal Credit is designed to work efficiently for both employed and self-employed people alike. There is parity in the way we treat earnings, and assumed earnings as applied by the Minimum Income Floor, in Universal Credit.

A newly gainfully self-employed claimant will have a 12-month start-up period where the Minimum Income Floor isn’t applied. During this time the claimant will have quarterly reviews with their work coach where they will discuss how the business is developing, be signposted to relevant support, and reminded when the Minimum Income Floor will apply.

The Minimum Income Floor is an assumed level of earnings set at a level that matches the individual’s work expectation*. It exists to encourage gainfully self-employed individuals to increase their earnings through developing their self-employment. As a result, whilst claimants are gainfully self-employed, and therefore have a Minimum Income Floor applied, they are exempt from having to search for or carry out any other work, allowing them to concentrate on making a success of their business and maximising their returns up to and beyond the level of their Minimum Income Floor.

The Minimum Income Floor is designed to address flaws in the current system which allow self-employed claimants to receive full State support while declaring low or zero earnings. It also prevents people from under-declaring earnings. This situation is unsustainable and unfair on the taxpayer.

* this is determined by the claimant’s circumstances. If the claimant has no restrictions on the number of hours they can work, we would expect them to look for work for 35 hours per week. If a claimant has a child of school age, for example, we would reduce the work expectation down to school hours, this could be 20 hours per week for example. The MIF is a calculation based on the hours x NMW or NLW (depending on the age of the claimant).