Will we lose all UC due to minimum income floor?

MaryJaneParker

Hello!
I am sorry to have to ask this here, but I have spoken to 5 different work coaches who all give different answers, so I am hoping to get some clarification on how the minimum income floor works as I am started to get very stressed about this. Have looked through the forums as well but not found a couple of the very specific questions I have.

My husband and I have been joint claimants for UC as self employed. We had a "startup period" which ended this month, meaning that our minimum income floor was calculated at £0, and only any actual earnings would be deducted from our UC payment. The amount we get is £525.72 (standard allowance) and £695.02 (housing allowance), with anything we earn deducted at a rate of every £1.00 earned in take-home pay reduces our UC by 55 pence. If we earn £0 profit in one month our UC comes to £1,220.

Here are my questions.
1) The minimum income floor will come into effect from my next payment, however I have not been told what the minimum income floor is. Based on research online I can assume the minimum income floor should be around £1440 for one person, or £2880 for two people?
2) My understanding (and hope) is that the minimum income floor will only reduce my "standard allowance" but the housing allowance is untouched, is that correct?
3) Even if using just the MIF for 1 person, £1440 would reduce the full "standard" allowance to £0. I am so confused by this, does this mean there is no way to be self employed while earning UC? I can't see any scenario where a person would be paid any standard allowance UC if there is a minimum income floor taken into account.
4) We may want to give up on the self employment and look for other work, how does this affect our UC? While looking for work (and being unemployed), will we still get our standard allowance? And once we have found work, what happens then?
5) If only one of us looks for work, while the other stays self employed what does that look like? The MIF would still take effect and surely we would once again be left with no standard allowance?

I hope someone with some experience can help shine a light on this. It's been quite stressful not knowing, we were literally told by one work coach that "don't worry about that until it happens" which seems nuts as it leaves us with very little info to plan for the future. 

calcotti

1) You are each expected to earn the equivalent of 35 hours/week x NMW. Your two amounts are added together if you are both SE. Of there are any reductions to your expected hours then the MIF would be reduced accordingly. NMW is currently £9.50 so for 35 hours/week this is £1440.83/month. For the two of you £2881.66/month. These figures are reduced a bit to allow for NI and income tax that would be due if you earned that much.
2) That's not correct. An earnings deduction is applied to the whole award.
3) The MIF sets the level of earnings. The deduction from UC is 55% of the amount.
If the MIF applied is £1440 the earnings deduction is £792 so if the maximum UC is £1220  there would still be UC payable of £428.
4) If you are reassessed as not gainfully employed you will have to search for work and prove what you are doing to look for work. It doesn't change your maximum entitlement but would mean taht the mIF is not applied.
5) See 3)

MaryJaneParker said:

..we were literally told by one work coach that "don't worry about that until it happens" which seems nuts as it leaves us with very little info to plan for the future. 

I agree that comment is nuts! The point of the MIF is to force you to focus on whether or not your self employment is viable. (We can debate whether it's flexible enough etc but that's irrelevant to what actually happens for you.)

You might find this helpful
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/minimum-income-floor/

MaryJaneParker

@calcotti
Thank you so much for the reply! So based on point 1 if it is calculated at £2881 that means our next payment would just be £0? It seems very poorly done of them to not inform us of this. Our next meeting with them is actually booked for after our next payment period as well, so seem they would be informing us of this way to late for us to have a chance to do anything about it. I will try reaching out to them via the journal to get more info.

Also regarding point 4, once we have found employment and are being paid a salary, do you get any UC or is UC really only for the duration that you are unemployed and looking for work?
Thank you again!

tightauldgit

Your MIF should be based on minimum wage - it's the NMW times however many hours you said you work self-employed when you started your claim and filled out all your info. 

I'm not entirely sure how it works when you go from being self-employed to unemployed - but you would have to make sure you actually are unemployed and have terminated the self-employment and you'd be genuinely expected to be looking for work. 

calcotti

MaryJaneParker said:

..regarding point 4, once we have found employment and are being paid a salary, do you get any UC or is UC really only for the duration that you are unemployed and looking for work?

You can get UC while employed but how much, if any, UC you get depends on the amount of earnings as per answer to 3). About a third (from memory) of UC claimant households include someone in work.

huckster

MIF based on 35 hours a week at national minimum wage is currently about £1300 a month.  So, if you both have MIF applying it will be about £2600 as minimum level that is used as self-employed earnings amount when calculating UC awards.  Even if you earn more than £1300 in a month for each person, then the higher earnings amount will be used to calculate UC awards.

If your self-employment is not earning you national minimum wage level over 12 months and the position is unlikely to change, then you might want to look at employed jobs instead.

Or get some business advice about how to improve self-employed earnings. On your local council authorities website, you should be able to find a page about self-employment help that is available in your local area.

calcotti

huckster said:

MIF based on 35 hours a week at national minimum wage is currently about £1300 a month. 

Thanks huckster, I wasn’t up to date with the amount of deduction for NI and income tax.

(edited to remove double negative as a result of a typo)

NedS

calcotti said:

huckster said:

MIF based on 35 hours a week at national minimum wage is currently about £1300 a month. 

Thanks huckster, I wasn’t not up to date with the amount of deduction for NI and income tax.

I sometimes use this site for a quick indication of how much tax and NI may be deducted for a given salary:

https://www.thesalarycalculator.co.uk/salary.php

Which shows a salary of £17,290 (35h x £9.50 x 52) gives a take home pay after tax and NI of £1314.96 per month

Not sure how accurate that is for the MIF (but it's in the right ball park) as there have been some changes mid year this year for the changes in NI rates, which caused MIF values to increase last month as NI rates dropped back from 13.25% to 12%

tomtom256

It's the CET that is used, when calculating the award where joint claimants both have the MIF applied. But from what you say, it would probably still result in a nil award. It's a strange calculation and quite long winded.
At your initial gateway intervention, the MIF should have been discussed with you and you should have been given the figure they would use and why it had been set at that level. Your expected hours could be anything up to 35 hours per week and is normally tailored to you circumstances.
You should also have been having quarterly reviewsto check you where taking steps to increase your income and where on target to achieve the MIF.
The figure NedS has quoted is about right give or take a few quid for a 35 hpw MIF.

calcotti

NedS said:

Not sure how accurate that is for the MIF (but it's in the right ball park) as there have been some changes mid year this year for the changes in NI rates, which caused MIF values to increase last month as NI rates dropped back from 13.25% to 12%

The bigger change last year for those on a low income would have been the large rise in the threshold at which NI is payable.