Universal Credit warning as self-employed people could face £2,500 bill | Personal Finance | Finance
Self-employed individuals could potentially lose a significant source of income, Universal Credit. This benefit is available to some self-employed people to assist with living costs.
It can be claimed by those on a low income, out of work, or unable to work. The amount received from the benefit depends on earnings reported to the Department for Work and Pensions (DWP) at the end of each monthly assessment period.
Universal Credit payments are calculated against an assumed level of earning – the minimum income floor. If earnings exceed the minimum income floor, Universal Credit payment is based on actual earnings.
However, if earnings are less, the DWP uses the minimum income floor to calculate potential payments. As earnings may vary slightly each reporting period, several periods will be examined to ensure more consistent Universal Credit payments.
If a loss rather than a profit is reported, the loss will be carried over until a profit is made, potentially resulting in increased Universal Credit payments until the loss is accounted for. However, the DWP warns there is a limit to earnings before Universal Credit payments cease entirely.
This threshold is £2,500 or more over the calculated limit – known as surplus earnings.
If you earn £2,500 or more over the limit, your Universal Credit payments will cease and any amount over £2,500 will be considered as earnings in the next assessment period. However, this doesn’t mean you cannot receive Universal Credit again in the future.
The DWP emphasises that you can be eligible for Universal Credit again if you fall under the limit, including the amount that was carried over, in the next assessment period. Full details on Universal Credit payments for self-employed people, including how to apply, can be found on gov.uk here.