Struggling to understand UC/Self-employment/MIF

InLimboInLondon

Hi, I'm really struggling to understand what will happen to my UC benefit once the minimum income floor (MIF) is back in effect.  Hopefully someone can help me?

For background, I have previously had a start up period (on a previous claim), so if I am presumed to be gainfully employed, I will definitely have a MIF, which I expect to be around £1,100.  I am single, no kids, rent from a private landlord, I have a health condition but am fit to work with reasonable adjustments, and these appear to have been accepted by DWP.

I am subject to the benefits cap,  - so, e.g. if I earn nothing that month (as will likely be the case this month, my first month of this claim) my current UC is made up of the full amount of UC + rent help of £1,200  = equalling a monthly amount of £1,294 after the cap).

I'm assuming that from September the MIF will apply to me, but I need to understand what effect that will actually have on my payments.  I've read things that say my claim will be completely closed because I will earn too much, but calculators suggest I will still get some help.  Whilst I hope I will build up my income levels fast, realistically getting to the equivalent of my anticipated MIF will take several months (I have been running this business part time and have been invoicing on average £500-600 a month, along side a full time job which I have had to give up for health reasons; unfortunately my main existing client for this work tends to be quiet over the summer, and I am not anticipating being able to bill for any work for them this month)

The best thing I could think to do was tell a benefits calculator (I used EntitledTo) that I was employed and that £1,158 was my gross earnings in a month, to see what it spat out at the end.  That suggests that I would still get some help - £836 a month.  Whilst that wouldn't pay the rent, it's better than £0, but I'm really scared the true answer is actually £0, in which case I need to decide now to find employment I can actually do with my health condition.  

I actually can't find anything online that actually concretely answers this question, is anyone able to advise? I've found lots of examples of what peoples minimum income floor will be, but nothing that actually starkly explains what happens to what you actually get paid.

Thank you in advance...

calcotti

The MIF is an assumed level of earnings. If the MIF applied is £1158 then the earnings deduction is 63% x £1158 =  £729.54. Your UC is reduced by this much.

Logically the MIF should be applied to your maximum UC amount and the cap only taken into consideration after that if applicable but I will see if I can check the interaction between MIF and the cap. 

InLimboInLondon

thank you.  I hadn't even thought of that (the cap/MIF issue)  I re-did EntitledTo calculator putting in 1158 as the figure of earnings on a self-employed basis, and left all the other figures the same, which changes the benefit figure slightly to around £795, and the explanation definitely suggests that the cap is not considered until after that calculation.  hopefully this does mean I would actually get this or close in a worst case scenario!  I don't want to bug my work coach with my anxiety around this, especially as I don't even have my claim awarded yet, it's still processing.  Realistically I can't live on min wage regardless (that's central(ish)  london for you eh...) but do have some small amount of savings which will help bridge the difference whilst I'm building up income, but obviously that wouldn't work if the true answer is "ha, ha! you get NOTHING".  Rational me thinks I'm being paranoid, but I also want to understand the worst case scenario, which, if this is correct, is nowhere near as bad as I was fearing.

calcotti

It was late when I posted last night and I took the £1158 figure from your opening post.

The MIF at 35 hours/week and assuming you you are eligibility for the standard rate will be £8.91 x 35 hours x 52 weeks / 12 months = £1351.35 minus reduction for tax and NI say £127.14 (I don’t know what figure DWP will actually use) = £1224.21. The earnings deduction would then be £771.25.

Like you I can’t find any examples featuring both MIF and Benefit cap but remain of the opinion that the logic is that the sequence should be to calculate the maximum UC entitlement, apply the MIF to calculate UC payable and only then check whether the benefit cap applies.

tomtom256

Where the MIF is in effect, it does count towards the benefit cap and can exempt you. Quite a few claimants where hit by the benefit cap when the MIF was removed as part of the covid19 easements.

calcotti

tomtom256 said:

Where the MIF is in effect, it does count towards the benefit cap and can exempt you. Quite a few claimants where hit by the benefit cap when the MIF was removed as part of the covid19 easements.

Thanks, tomtom.
To be clear, the MIF does not count as earnings towards exemption from the benefit cap.
However application of the MIF will have the effect of removing people from the being affected by the benefit cap because it reduces the amount of benefit payable to an amount atet is below the capped amount.

InLimboInLondon

Thank you for all your help with this, I am definitely more reassured now - obviously in an ideal world I would be earning close to minimum wage pretty soon, regardless so will need to know this stuff, but even if I had a really bad month or was ill and couldn't work there would still be something.  Am definitely glad I have a teeny tiny (well under £6k) cushion though!

InLimboInLondon

btw- forgot to add, because of my health condition I'm expecting the MIF to be up to 30 hours (at £8.91) hence 1,158 (and a few pennies, so that's how I arrived at that figure.  My work coach seems to be happy with 25-30 hours so although things could change and they say 35 hours I think it's unlikely, so i've gone with the top estimate of 30 hours.  But anyone else with the same question who is capable of 'proper' full time should definitely go with your 35hours calculations!

calcotti

InLimboInLondon said:

.. I'm expecting the MIF to be up to 30 hours (at £8.91) hence 1,158 (and a few pennies, so that's how I arrived at that figure.  

There will be a deduction from this figure to allow for tax and NI so the earnings figure used to calculate the earnings deduction will be less than £1,158.

tomtom256

The MIF will be set at your expected hours x NMW.

Expected hours is based on your circumstances i.e. age of youngest child, no children or health conditions. So differs per person.