Self-Employed Will Lose £4,000 Under New Universal Credit Rules
- Changes to Universal Credit will hit self-employed workers
- They’ll miss out on top up payments during bad months
- Uber drivers and Deliveroo riders included in those who will miss out
78% of self-employed workers will lose up to £4,000 a year in benefits when Universal Credit rolls out, according to a new report.
New rules in the frequently criticised benefits system means that workers whose earnings fluctuate between months, will miss out on top-up payments in months with lower earnings.
Consultancy firm, Policy in Practice, said four fifths of gig economy workers who don’t receive a regular salary, will be hit by the changes.
Uber drivers and Deliveroo cyclists are among the workers likely to be affected, according to the firm.
Senior MP Frank Fields said the changes are are another “razor cut at the vulnerable human underbelly of the labour market.”
Universal Credit, which is currently being rolled out around the country, allows for low-paid workers to claim handouts to top up their income.
But for the self-employed, there will be a cap on the amount they can claim based on a so-called ‘minimum income floor’, calculated as the minimum amount they should expect to earn while working full-time.
When they fail to meet that target, their benefits will no longer be increased to make up for it, and if they earn over it, their handouts are cut.
Earnings are calculated on a month-by-month basis, meaning workers whose pay varies throughout the year will see huge swings in the benefits they get too.
The firm found that 78% of the self-employed will lose out as a result of the changes.
The average financial hit will be £344 a month- which adds up to over £4,000 a year.
People setting up a business have a year to establish themselves before they will be affected by these changes.
The Department for Work and Pensions said, “Universal Credit supports self-employed people for up to a year while they establish their business; however it is not designed to prop up unviable businesses.
“If, after a year, the business isn’t meeting the minimum income floor, and someone wants to continue to receive benefits, they will have to either increase their self-employed earnings of look for other work.”
Will you be affected by these changes? Let us know in the comments.