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Universal Credit: Minimum income floor to be reintroduced following Budget – full details

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Universal Credit can be claimed by those who are unemployed, in PAYE work or who are self-employed. Self-employed claimants, prior to the pandemic, were treated as if they were earning a certain amount known as the MIF.

The self-employed are also set to see state support changes elsewhere, with the Chancellor confirming SEISS alterations are forthcoming.

On SEISS, Mr Sunak confirmed the following: “When the scheme was launched, the newly self-employed couldn’t qualify because they hadn’t all filed the 2019-20 tax return.

“But as the tax return deadline has now passed, I can announce today that, provided they filed a tax return by midnight last night, over 600,000 more people, many of whom became self-employed last year can now claim the fourth and fifth grants.

“Over the course of this crisis, we will have spent £33 billion supporting the self-employed; one of the most generous programmes for self-employed people anywhere in the world.”

SEISS, furlough and various other support measures were extended into the summer but the Low Incomes Tax Reform Group (LITRG) warned there will be winners and losers within the self-employment sector.

Victoria Todd, the Head of LITRG, explained: “The Government’s announcement will be a help to many people who first started trading in 2019/20.

“However, with trading profits for 2019/20 being included in the grant calculation, it could mean that the fourth grant for existing claimants is different from what they might have been expecting.

“As they are not newly self-employed, they may think the announcement does not affect them; they would be wrong.

“For example, those who began trading in 2018/19 had the first three SEISS grants calculated on the assumption that their 2018/19 profits were for a full year, which distorted the calculation of average monthly profits.

“As the fourth grant will bring 2019/20 trading profits into the calculation, the effect of that distortion will be reduced and in some cases these individuals should be eligible for a higher grant.

“On the other hand, if an existing claimant had lower profits in 2019/20 than in previous years, then the inclusion of that year will reduce the average monthly profits used in calculating the grant amount.”

LITRG highlighted that not everyone who started their business in the 2019/20 tax year will benefit from this change.

They explained that if a person’s trading profits are below 50 percent of their total taxable income for 2019/20, then they will not usually be able to claim the grant.

For example, if a person left employment part way through 2019/20 to start their own business, then your employment income could exceed their trading profits for that year and the 50 percent test would not be met.

Victoria concluded by urging self-employed workers to focus on the details: “As always, the devil is in the detail. Depending on their circumstances, those who started trading in 2019/20 may not be eligible for the grant – or otherwise might not get as much as they were expecting. We also encourage existing claimants to check how the changes affect them to avoid any unexpected surprises when they claim the fourth grant.”

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