Universal Credit. Minimum income floor. What is income

foxy91 · 31 October 2020 at 9:50PM

Hi, sorry if this post seems really dumb but I am trying to understand this minimum income floor on universal credit, and if it is reimplemented next month.
I am self employed and am currently claiming UC, have been for about 5 months so never had a MIF. I report what I've made and what I've spent each month. My question is that I have read that the MIF assumes you have a certain amount of income each month, but what exactly do they mean by income? Does this term mean the turnover you make before your expenses are taken out? Or is this your profit after your expenses are taken out?
My apologies again if this is a really stupid question, if so can someone guide me on where I am going wrong.
Many thanks to all of you.

calcotti · 31 October 2020 at 10:16PM

See if this helps https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/

The MIF is an assumed level of ‘earnings’ - the difference between income and expenditure.

More information here https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide/universal-credit-and-self-employment-quick-guide and here https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/how-the-minimum-income-floor-works-if-youre-self-employed/

foxy91 · 31 October 2020 at 10:29PM

I'm still quite confused, on these websites it states examples of people MIF being £305.20 a week. If this is the case why would someone need to claim UC if they were earning that much anyway? Wouldn't they not be eligible if they were already on that much per week after their expenses were taken off.
Basically is this business income / earnings they mean or personal income? If I just took all my self employment turnover for myself I'd soon have no business left to run.

calcotti · 31 October 2020 at 10:32PM

When the MIF applies you will be assumed to be earning a certain amount/week even if you actually earn less. This may result in no UC being payable. The actual MIF amount and whether or not any UC remains payable will depend on your circumstances. £305.20 will be the amount for somebody expected to work 35 hours/week based on the NMW.

foxy91 · 31 October 2020 at 10:39PM

Okay lets say the MIF is applied and in force.
Lets say I sell £5000 worth of products in a month, but have £4500 of expenses in buying more stock.
Is my income classed as the £5000 I made? or the £500 I actually took for myself?
What I'm lost with is that I thought UC was for low income people but they are assuming each month you're making around £1200. (Depending on circumstances)
If I was reporting I was making that much at the moment (with no MIF) they wouldn't be paying me anything as id be thousands in profit. So I can't understand how anyone would get paid any UC while self employed if they always assume you're taking home so much in the first place with a MIF.

KatrinaWaves · 31 October 2020 at 10:41PM

UC is for people on a low income, but if you are self employed you are expected, once the MIF is in force, to earn a full time minimum wage. Otherwise the UC is simply propping a business that is not financially viable and that is not what it is there for.

They give you a year (in normal times) to get up and running, but after that it is expected to support you.

calcotti · 31 October 2020 at 10:43PM

foxy91 said:

Okay lets say the MIF is applied and in force.
Lets say I sell £5000 worth of products in a month, but have £4500 of expenses in buying more stock.
Is my income classed as the £5000 I made? or the £500 I actually took for myself?
What I'm lost with is that I thought UC was for low income people but they are assuming each month you're making around £1200. (Depending on circumstances)
If I was reporting I was making that much at the moment (with no MIF) they wouldn't be paying me anything as id be thousands in profit. So I can't understand how anyone would get paid any UC while self employed if they always assume you're taking home so much in the first place with a MIF.

Your actual ‘earnings’ for the month are £500 but if the MIF applies at £305.20/week your UC will be calculated as if your earnings are £1,322.53. Many people will still have UC entitlement due to rent and/or children. The idea is that if you can’t make self employment pay you should become a jobseeker and look for paid employment.

With latest lockdown announcements I think government will have to extend the MIF suspension for at least a month - but we’ll have to wait to find out.

foxy91 · 31 October 2020 at 10:47PM

calcotti said:

foxy91 said:

Okay lets say the MIF is applied and in force.
Lets say I sell £5000 worth of products in a month, but have £4500 of expenses in buying more stock.
Is my income classed as the £5000 I made? or the £500 I actually took for myself?
What I'm lost with is that I thought UC was for low income people but they are assuming each month you're making around £1200. (Depending on circumstances)
If I was reporting I was making that much at the moment (with no MIF) they wouldn't be paying me anything as id be thousands in profit. So I can't understand how anyone would get paid any UC while self employed if they always assume you're taking home so much in the first place with a MIF.

Your actual ‘earnings’ for the month are £500 but if the MIF applies at £305.20/week your UC will be calculated as if your earnings are £1,322.53.

Thank you, can I also ask if the MIF is inforce, do you still submit your earnings and expenses?
And I'm guessing if so, if you put a lower amount for your earnings than you MIF the MIF will always be the lowest figure they take into account.

calcotti · 31 October 2020 at 10:53PM

foxy91 said:

calcotti said:

foxy91 said:

Okay lets say the MIF is applied and in force.
Lets say I sell £5000 worth of products in a month, but have £4500 of expenses in buying more stock.
Is my income classed as the £5000 I made? or the £500 I actually took for myself?
What I'm lost with is that I thought UC was for low income people but they are assuming each month you're making around £1200. (Depending on circumstances)
If I was reporting I was making that much at the moment (with no MIF) they wouldn't be paying me anything as id be thousands in profit. So I can't understand how anyone would get paid any UC while self employed if they always assume you're taking home so much in the first place with a MIF.

Your actual ‘earnings’ for the month are £500 but if the MIF applies at £305.20/week your UC will be calculated as if your earnings are £1,322.53.

Thank you, can I also ask if the MIF is inforce, do you still submit your earnings and expenses?
And I'm guessing if so, if you put a lower amount for your earnings than you MIF the MIF will always be the lowest figure they take into account.

Yes you do and if your actual earnings are higher than the MIF your actual earnings will be used to calculate UC. Yes, the MIF effectively becomes a base line.

foxy91 · 31 October 2020 at 11:07PM

Thank you for clearing it up for me. I am hoping they extend the removal. Covid has hit me hard taken me down to less than a quarter of what I was making this time last year.

Thanks again.