I’m self-employed. Should I apply for Universal Credit?

Lots of people have been asking variations on this same question. Unfortunately, there are no easy answers.

At least half a million people have applied for Universal Credit (UC) in the past fortnight. That’s because self-employed people whose income has dried up due to COVID-19 have (until late last week) only been able to get financial help through the benefits system.  

The two main forms of assistance available are Employment and Support Allowance, for those who have a health condition and have paid the requisite level of national insurance contributions, for the past two years) and Universal Credit. Both have now been raised to a minimum of £94.25 a week – the level of statutory sick pay in the UK. It’s higher if you have children, a health condition or disability but it doesn’t come close to the level of pay guaranteed under the COVID-19 jobs retention scheme, which offers 80% of pay up to a maximum of £2500 to employees ‘furloughed’ (i.e. put on temporary paid leave) while businesses are shutdown.

“I am afraid to say you would be joining a queue of many thousands” 

There is also so-called “new style” Jobs Seekers Allowance if you have been an employee in the past two – three years and have paid the necessary level of national insurance. From what you say, it sounds like UC will be the only benefit you’ll be able to get – but it won’t be straightforward.

One of the problems is that people can’t go to the jobs centre to have their application processed, for obvious reasons. And with people being urged to go online rather than phone, you can see why the system is failing to cope with all this new extra demand.

I am afraid to say you would be joining a queue of many thousands waiting to make an application. One MP reported last week that his constituent had 33,000 people ahead of him in the queue when he tried to apply. 

Once you (eventually) reach the front of the queue, you have to fill in the application form and submit documentation. But that’s not the end. You then have to phone the DWP and wait many more hours to arrange a separate phone interview at a later date. Some people report being told the next available interview is weeks away.

“The 5 week wait for Universal Credit isn’t ending anytime soon” 

Possibly the grimmest part is having to wait 5  weeks to receive your first UC payment. You can ask to receive the cash as a loan within 5 days, though this will have to be paid back once your UC starts coming through. This may seem bizarre and even unfair, but there’s no prospect of the government ending this 5 week wait even now, as its seen as integral to the fairness of the system.

This is not to say that Universal Credit is NOT worth applying for. If you really need that cash advance (and at least 70,000 people in the past fortnight have requested it), it could be the quickest money you could get your hands on – bar dipping into your savings or asking a trusted loved one for support. But I would ask myself if I want to put myself through the stress of waiting, being checked out and experiencing a potential knock-back.

“With our mental health being constantly tested right now, it’s important to pick your battles carefully”

In this current crisis, it’s important to recognise what actions are worth your while, as well as what you can do to reduce strain on public and civic services right now. With our mental health being constantly tested right now, it’s important to pick your battles carefully. You may be able to find other ways of getting through this period without hitting the UC button.

If you can wait until June to receive your first payment under the Income Support scheme, you’ll find it’s more lucrative and less stressful. You are eligible if you were mainly self-employed during the past three tax years to April 2019.

You should get 80% of your average monthly earnings over that period, based on your SA302 annual summary of net earnings, for three months and backdated to late March. It could be extended, depending on external events.

If you have under a year of self-employed earnings in 2018-19, whatever you earned will be counted as total profit. HMRC will eventually send you a Self-Employed Income Support Scheme form to fill out. So sit tight.

In the meantime, it’s worth seeing if you qualify for a charitable or educational grant. Turn 2 Us is a fantastic resource. I also know the Musicians Union is making £1m available to members who are experiencing hardship as a result of COVID-19. It’s worth seeing if you are eligible.

Finally, make sure you apply to your landlord for a rent freeze, reminding them (politely) that in the present crisis, they are entitled to a mortgage payment holiday and have no right to begin any eviction proceedings.

I wish you the best of luck Matty!