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<p>The Department provides tailored support to our claimants who are in self-employment
through our work coaches to help them to increase their productivity and earnings.
Work coaches can refer low-earning claimants to mentoring support from New Enterprise
Allowance providers and sign-post claimants to the other extensive business support
which is already funded by the Government.</p><p> </p><p>All claimants with earnings
from self-employment, whether gainfully self-employed or not, are required to self-report
these each month to ensure that any Universal Credit (UC) payments take into account
all household earnings. Monthly reporting allows UC to be adjusted monthly. Claimants
are required to report the total of actual payments into and out of their business
in each month, minus any Income Tax, National Insurance, permitted business expenses
and relievable pension contributions actually paid. This gives a net profit figure,
which is treated as the self-employed earnings total in the UC calculation. Any drawings
from business to personal accounts or, where a claimant has incorporated their business,
payment of salary from their company to their personal account, is disregarded in
this calculation to avoid double counting.</p><p> </p><p>When a claim is made to Universal
Credit the Department will, on the basis of the information provided by the claimant,
assess whether the claimant may reasonably be expected to work. If a claimant is in
a group expected to work, the number of hours they may be expected to work is a maximum
of 35 but may be lower, for example to take account of caring responsibilities or
a health condition.</p><p> </p><p>If a claimant is self-employed and in a group expected
to work, the Department then considers a number of factors to establish whether someone
is gainfully self-employed. A claimant is considered to be in gainful self-employment
where all of the following apply:</p><p> </p><ul><li>the claimant is carrying on a
trade, profession or vocation as their main employment</li><li>their earnings from
that trade, profession or vocation are self-employed earnings</li><li>the trade, profession
or vocation is organised, developed, regular and carried out in expectation of profit</li></ul><p>
</p><p>If all of the above are satisfied, then the claimant is considered gainfully
self-employed. A Minimum Income Floor (MIF) is calculated by multiplying the number
of hours the gainfully self-employed claimant is expected to work by the relevant
National Minimum Wage for their age, minus notional deductions for Income Tax and
National Insurance Contributions. Gainfully self-employed claimants with a MIF applied
to their claim are free from requirements to seek other work and are free to undertake
those activities that they consider will maximise their profit including decisions
about when and how to work most effectively.</p><p> </p><p>As we announced in the
Autumn Budget 2018, we are extending the 12-month start-up period where claimants
are exempt from the Minimum Income Floor to all gainfully self-employed claimants
who are new to Universal Credit. This start-up period will provide time for self-employed
claimants to establish and grow their business, or to adjust to Universal Credit.</p><p>
</p><p>On average earnings from self-employment are lower than from employment and
the self-employed make up a significant proportion of those in in-work poverty. The
Government believes the MIF, by incentivising claimants to earn more from self-employment,
or alternatively enter employment, offers the most effective way of tackling in-work
poverty for the self-employed.</p>
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