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Self-employment and minimum income floor

Universal Credit - Minimum Income Floor

The Minimum Income Floor (MIF) allows the government to assume a certain level of self-employed profit, even if you don't earn that amount.

Unless you are in a grace period, if you are self-employed, are in the 'all work related requirements' group and your earned income is lower than your MIF amount, your MIF will be used instead of your actual earnings when calculating your Universal Credit (UC) award.

MIF in the entitledto calculator

Claimants who are caring for a child under the age of 3 are not placed in the 'all work-related requirements' group so are exempt from the MIF. In couples, one person can be nominated as the primary carer and this person will be exempt from the MIF. In the entitledto calculator it is assumed the 'partner' is the primary carer for a child under 3. Please enter the details of the couple so that the primary carer is the partner in the calculation.

The 12-month grace period

New UC claimants receive a 12-month grace period before the MIF rules apply. For people who are already self-employed when they start their UC claim, the 12 months runs from their UC start date. For people who become self-employed after starting their UC claim, the 12 months runs from the date they start being self-employed.

The grace period can’t be used twice for the current trade, profession or vocation on a current or previous award of UC in the last five years.

How much is the MIF?

If you are single, your MIF is your individual earnings threshold, which in most cases will be the appropriate national minimum/living wage rate for your age multiplied by 35 hours – though the hours may be reduced in some circumstances due to caring responsibilities or health issues.

Examples based on 35 hours for 2023/24:

  • Age 23+ is 35 x £10.42= £364.70 a week (£1580 a month)
  • Age 21-22 is 35 x £10.18 = £356.30 a week (£1544 a month)
  • Age 18-20 is 35 x £7.49 = £262.15 a week (£1136 a month)
  • Age under 18 is 35 x £5.28 = £184.80 a week (£801 a month)
  • Apprentice is 35 x £5.28 = £184.80 a week (£810 a month)

A notional amount to reflect income tax and national insurance is also deducted.

If you are in a couple and your earnings are below your MIF a different process takes place to work out what earnings amount to use in your Universal Credit calculation.

Both members of the couple will have their MIF worked out separately using the method described above and then added together to provide a combined MIF amount, even if one member of the couple is not self-employed.

Your individual earnings from self-employment and/or employment will be added together to provide a combined earnings figure for you as a couple, to compare against your combined MIF. This is to check that between you as a couple, you are earning at least the combined MIF.

If your combined earnings are less than your combined MIF, then the self-employed earnings will be replaced in the calculation with the individual MIF for that member of the couple (or the amount needed to bring the combined earnings in line with the combined MIF, if this is less).

This is a complicated part of the Universal Credit calculation and you should seek advice if you are earning below your Minimum Income Floor.

Council Tax Support - Minimum Income Floor

Some Local Authorities have also introduced a Minimum Income Floor for self-employed claimants as part of their Council Tax Support/Reduction schemes.

The way this works tends to be similar to how described for Universal Credit above but some things such as who is exempt from the MIF, the number of hours used to calculate your earnings threshold and the length of the grace period can vary from scheme to scheme so it is always best to check with your own Local Authority to see how the MIF might affect your Council Tax Support/Reduction entitlement if you are self-employed and on a low income.