Educational Grants and Self-Employment in Universal Credit Calculation

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Me and my partner applied for Universal Credit last month. The main reason for doing so is that my partner's income as a self-employed translator has tanked due to AI. She is trying to pivot to other freelance work, but it's taking time to build that up.

Because we live together we had to apply as a couple. My income has been mainly in grants for my PhD, which come every 3 months, but I’ve had a few small jobs and I am starting as a regular part-time job in November.

My partner has qualified for a "start-up period" as a freelancer on universal credit. She was told by her UC self-employment work coach that they had calculated she should be earning at least £1500 per month, and so for the first year they would top up her actual income to this amount. The idea is that after a year she should be earning £1500 per month without the help of universal credit.

Due to the fluctuations in our income, in the first assessment period we had less than £300 coming in between us. When the calculation finally arrived, it said we would get £34 this month, between the two of us.

I am pretty furious about this as given how little we earned and I’m not sure where this figure comes from. Under “Other income” it says “We take money off your payment for other income that you have. For example, pensions and educational grants.”

The figure deducted was £775.91 for this “Other income”. I did get £17725.49 in the last 12 months from grants and will receive more in October and January, but that isn’t going to pay the bills for both of us.

The calculation also made no mention of this mythical £1500 amount that they are supposed to be topping up my partner's income to.

Does this figure seem right or have UC made a mistake in the calculations?

I would advise you to contact the Help to Claim Service which is part of Citizens Advice. You can find details at Contact us about applying for Universal Credit - Citizens Advice. They will check whether the payment that you have received is correct. The advice re self employment is incorrect. The coach should have explained that a minimum income floor will be imposed after the first year of the claim. In the first year it is the actual income from self employment that is used to calculate Universal Credit each month.

Thanks, we did go into Citizens Advice to ask about this before we claimed, they didn't really seem to understand how educational grants would affect a claim though, they just said apply and see what happens...

I think you’ve misunderstood the work coach.

The £1500 is the minimum income floor, this is what your partner is expected to earn.

In the ‘start-up’ period it just means they won’t use the minimum income floor to calculate your award, after a year the £1500 will be their reported earnings whether they earn that or not.

Educational grants are considered income for the year, they won't look at what you get each month. Dd was considered to have the full annual loan money even if she didn't take it! They also assumed all but £20 is handed over to me. You can't earn £17k a year but because it comes in 3 chunks be treated as if you earn nothing the other months

I'd also remind you than unless you are in London, £20k is considered full benefits, you are unlikely to get significant top up on £17k, I was awarded only £210 a month for the 2 of us on a significantly lower income than yours

Yeah I get that... even though my partners income is really poor some months we are able to get by. I guess I thought the self-employment support was a lot more generous than it actually is...

Educational grants & loans can be a bit of a nightmare in UC. Help to Claim are experts at this stuff and should be able to put you right.

Do you own your home? In terms of what UC sees as your needs housing makes a massive difference as renters can get a Housing Costs Element.

The Minimum Income Floor assumes self employment is viable and that the claimant is making a multiple of the National Living Wage. Even if your business isn't making that much you will be deemed to have that much income from work.

However, the first year of a new claim is treated as a 'start up' period when the MIF does not apply.

You’ve misunderstood the £1500 part. That’s the minimum floor income so it’s been disregarded for the first 12 months. Universal credit is made up of elements on your statement. Couple element , children , housing, carers etc…. So if they’ve put out the correct elements - then they’ll do the deductions taking into account income from both of you, after 12 months it will be assumed your partner is earning £1500 so even if she isn’t you’ll be awarded as if she is, at the mo they will work with her actual income (&yours) and ignore the minimum expected. If you have children then you’ll have a work allowance which will be either £404 or £600 and something depending if you rent or own, this will be deducted as an allowance before they do the income deductions, then deductions are done at 0.55 x£1.00. If you want to list your elements and amount and amounts they’ve written on statement for deductions I can check if it’s right for you. If on Facebook there’s a group that can help you check it’s all correct or not. Universal Credit and legacy benefits or there’s Universal credit and the self employed one.
Yes there won’t be much of a top up on £17000+

This was based on what a friend said, who is self-employed and on UC, and told me this is how it worked. So I don't quite understand how he got it so wrong

The benefit cap may apply but doesn't apply if you have 'reasonable' earnings. There's also a grace period before it applies which is one reason new applicants are asked about recent earnings.

Thanks this sounds like a good call then if they are experts I will do this. My grants run out soon and I also need advice about what I can claim when they end

No it’s not as generous as was on tax credits. It’s all been changed to stop self employed claiming they’ve had a bad month/ year etc when they haven’t and getting top ups when not entitled- this way they are saying - everyone should be earning min wage and if your business isn’t then go get a min wage job as it’s not working and we are not supporting it anymore but we will for the first 12 months. That’s how it was explained to me anyway. So it’s all about regular work coach meetings to get people up to the point of supporting themselves without the need for the benefit. They just haven’t considered the way some self employment works , for eg- seasonal work, or some months needing to spend so much more on materials so could have a negative month for 2-3 months.

Well it’s a minefield so I don’t blame him.

Do you know what happens if we stop our claim and re-apply in a few months (when my grants end) - will the 12 month period carry on, minus the 1 month we have already claimed?

I’m not 100% sure but I think it’s just 12 months from the date partner first declared self employed with UC. Almost sure you can’t re start the 12 month grace period.

@liverpoolgal82 has it.

Tax Credits had a couple of 'sweet spots' where people were sitting pretty doing a bit of creative writing or trading odds and sods on ebay and getting by OK.

UC is much more linear.

I'd need to look at the Regs for the detail but I'm sure there are provisions to stop people 'double dipping' with the Start Up period.