Hammond told how to fix Universal Credit for self-employed
Hammond has been told of almost ten changes that need to be made to Universal
Credit if it is to stop penalising self-employed freelancers.
Firstly, in each Jobcentre office, a small number of staff should undergo specialist self-employment training, and be shadowed by another team with support from HMRC.
A ‘work coach’ should also be provided once every 12 months to ensure compliance with the ‘gainful self-employment’ test, further to ‘business support access’ when claimants pass it.
Thirdly, self-employed claimants with fluctuating income or profits should be given an option of averaging their income over a period up to one year, says the Low Incomes Tax Reform Group, which made the 10 recommendations.
before the whispers about the chancellor being expected to make an announcement
on Universal Credit in today’s Autumn Budget, the LITRG’s other
- For the current one year start-up period to be extended to two years.
- For a general anti-abuse provision to be introduced to ensure people cannot manipulate their income in order to claim universal credit or more universal credit. This would apply to both employed and self-employed claimants and would remove the need for the complex surplus earnings rules that are due to come into force from April 2018.
- For all definitions to be fully aligned with the HMRC cash accounting rules, while giving thought to how the system can deal with those who are unable to use the HMRC ‘cash basis’ for tax purposes.
- For the minimum income floorto remain from Year 3 onwards but be calculated after deduction of pension contributions as well as tax and national insurance. This is to ensure self-employed claimants are treated as favourably as employees who make pension contributions.
- For two exceptions to be made to the minimum income floor. First, a three month grace period in each 12 month period to allow someone to deal with unexpected events or a one-off large expense without any adverse impact. Secondly, for a new discretion for DWP staff to be introduced to ‘dis-apply’ the minimum income floor in certain situations.
the system of reporting monthly income and expenses to be changed (albeit just
in cases where earnings are averaged), so that it follows the period of which
earnings are averaged.