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Universal Credit to cost self-employed up to £3,000 a year in lost income

The Government’s flagship Universal Credit scheme could cost many self-employed people in the UK up to £3,000 each year in lost income, according to a new report from The Association of Independent Professionals and the Self-Employed (IPSE).

The warning comes after the National Audit Office (NAO) highlighted how the widely criticised system, which replaces ten existing social security benefits including tax credits and housing benefit, is causing widespread “difficulties and hardship” for claimants and is failing to deliver value for money.

“The widespread condemnation of Universal Credit is clear and damning evidence of how damaging the policy has been”, said Imogen Farhan, IPSE’s Policy and External Affairs Officer.


Related: Archbishop lashes out at Universal Credit for leaving poor people ‘worse off’

“Nowhere is Universal Credit’s damaging impact felt more clearly than on the self-employed. The self-employed lose out due to monthly reporting because it does not take into account of the fact the income of the self-employed varies hugely from month to month.

“This means a self-employed person can end up £3,000 worse off each year under UC compared with an employee earning the same amount. That is a significant amount of money.

“Why, for example, should a farmer who sells or produce crops only at a particular time of year, be penalised?

“The Government must address the problem of monthly reporting by considering self-employed earnings over a more reflective annual basis.”

Related: Universal Credit at risk of collapse if problems aren’t fixed ahead of mass roll-out

She continued: “The latest criticisms come just three months after a particularly disparaging report by the National Audit Office (NAO) which clearly highlighted the ballooning costs of the scheme, as well as the “difficulties and hardship” individuals are experiencing as UC is rolled out.


“The growing warnings of not just the NAO but the many other independent bodies must be heeded. The reforms damage entrepreneurship and cost self-employed people thousands of pounds a year.

“The Government cannot bury its head in the sand about Universal Credit’s failures any longer. It must urgently rectify the problems rather than pretending they do not exist.”

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