Self-employed people could suffer two Universal Credit cuts at once from September

A benefits cap called the Minimum Income Floor is due to kick in (Image: Getty Images)

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Self-employed Brits face the prospect of two Universal Credit cuts at once from September as Covid help comes to an end.

Ministers confirmed tonight that a little-known benefit cap for self-employed claimants will be reinstated from August 1.

The Minimum Income Floor (MIF), which was suspended due to Covid last year, means some claimants will start getting reduced payments from September.

That is the same month as a £20-a-week cut to six million claimants’ Universal Credit starts taking effect.

The Department for Work and Pensions (DWP) tonight insisted claimants will be given a month’s notice of the MIF returning – and many will not be hit until next year.

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Jobcentre work coaches will also have new powers to suspend the MIF for two months at a time, up to six months in total, on a “case-by-case basis”.

But Citizens Advice has previously warned the MIF could take up to £630 a month from people’s benefits.

Shadow Work and Pensions Secretary Jonathan Reynolds said: “This is a double whammy cut for the self employed who have suffered huge drops in income with many losing their livelihoods as a result of this crisis.”

“Labour are calling on the Government to keep the suspension of the Minimum Income Floor, and support Britain’s self-employed.

"Combined with their planned cuts to Universal Credit it’s clear this Government isn’t on the side of working people.”

Commons Work and Pensions Committee chairman Stephen Timms told the Mirror: “I’m concerned about it.

“I think it was absolutely the right thing to suspend the MIF and I’ve never been convinced it was the right thing to have it.

“I’m sceptical whether this is the right thing to do.”

Boris Johnson will be rolling back the support in Universal Credit
(Image: Barcroft Media via Getty Images)

The MIF caps the Universal Credit of “gainfully self-employed” people, so they cannot be given any more benefits than if they were earning the minimum wage.

Once a claimant’s self-employment earnings dip below minimum wage, they are not paid any more Universal Credit, even though they are taking home less money overall.

It is supposed to stop taxpayers propping up failed businesses for self-employed people who make a loss.

Some 746,000 Universal Credit claimants were self-employed in October, though not all are set to be affected.

Employment Minister Mims Davies said the “vast majority” of claimants will benefit from a one-year start-up period before the MIF takes effect.

Those who were mid-way through their start-up period in March 2020 will benefit from the rest of it from August 1.

Ms Davies told Parliament: “Our specialist Work Coaches will consider the circumstances of each claimant individually, so it will take time to return to our normal processes.”

She added: “We have always been clear that these would be temporary measures, keeping them under review in light of the latest economic and public health context – as such, we have extended the MIF suspension on two occasions since March 2020.

“With the success of the vaccine rollout and rising demand as the economy reopens, it is right that we now begin to reinstate our normal processes.”

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