Universal Credit: Payments for the self-employed can be halted if this rule isn’t followed

Universal Credit can be claimed by anyone who has fallen on particularly difficult financial times. This includes the self-employed who in recent weeks have seen drastic changes made to their claiming processes.

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Under normal circumstances, the government would use expected earnings to determine what amount of Universal Credit is paid.

However, as coronavirus continued to be a problem for the economy Rishi Sunak abolished the minimum income floor rules.

This will be a relieving change for those it affects but it should be noted that some reporting duties are required.

The government still requires self-employed claimants to report their income and expenses every month, even if there is no income coming in.

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As the minimum income floor has been abolished, these reported earnings will be used to determine how much income is paid out.

If the income and expenses are not reported, the claimant will simply not get paid.

If the figures are late, the payment may also be delayed.

The government advises that because of this, it is important to keep a record of all payments made into or out of the business.

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The earnings must be reported of the last day of each assessment period. Thankfully, claimants will be provided with prompts to remind them of it and keep them on track.

A “Report your income and expenses to-do” will be posted on their Universal Credit account on the last day of each assessment period.

If there is no income to report, the claimant will simply need to report “no” when asked about self-employed earnings.

Assessment period dates will likely be different for everyone but they will usually be calculated from the day that a claim is submitted.

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It is possible to report income in two separate ways.

The government advises people to report it online by completing the “Report your income and expenses to-do” on the person’s digital account.

However, it is also possible to report income by calling the relevant team.

The state aims to keep the reporting process simple by working on a “cash in, cash out” system.

They advise that self-employed claimants will need to keep a record of payments received into and paid out of the business which includes:

• the total amount the business received
• how much the business spent on different types of expenses, such as travel costs, stock, equipment and tools, work clothing and office costs
• how much tax and National Insurance the claimant paid
• any money the claimant paid into a pension

It’s also possible that claimants may be asked for receipts for any expenses claimed.

The earnings from self-employment are calculated as the total amount the business received minus any payments made for certain permitted expenses, tax, national insurance or pension contributions.

On top of these reporting rules, the claimant must also notify the state of any changes in circumstances which can significantly affect the self-employed work. Examples of this can include closing of the business or taking on certain caring responsibilities.

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