Universal Credit: Self-employed

Department for Work and Pensions written question – answered on 6th November 2018.

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Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential effect of changes to universal credit announced in Budget 2018 on self-employed people.

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

The legacy system serves to prop up unsustainable enterprises indefinitely and trap claimants in welfare dependency. We want to support people to be self-employed when it is the right thing for them to do to be financially self-sufficient. Key to this is continuing to support people in, or considering, self-employment to progress to a level of sustained financial self-sufficiency.

We recognise that it takes time for new businesses to grow and that even established businesses can experience difficulties. Last month’s Autumn Budget announced a 12-month exemption period from the Universal Credit Minimum Income Floor (MIF) for all new gainfully self-employed claimants, and an extension of the New Enterprise Allowance programme for a further two years beyond its current expiry date of March 2019.

We already provide a 12-month start-up period where the MIF is not applied for newly created businesses. The new 12-month exemption period will include new claims, such as from those running a long-standing business and those moving from legacy benefits to Universal Credit, whether following a change of circumstances or moved by DWP. This also includes those existing Universal Credit claimants who become gainfully self-employed.

These changes will provide all gainfully self-employed claimants with an equal chance, and support from specially trained work coaches, to grow their earnings, prepare and adjust for the application of the MIF. Currently, we forecast that, in 2023/24 130,000 self-employed people will have the space to grow a successful business when moving on to Universal Credit

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