Landlord fears Universal Credit could deter self-employed

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government, Universal Credit

A housing association has warned the Government that strict new rules for Universal Credit could “totally undermine” efforts by landlords to support residents starting up their own businesses.

Nick Atkin, chief executive of Halton Housing Trust – which owns and manages over 6,200 homes in Cheshire – fired the warning in evidence to the House of Commons Work and Pensions Committee, which is examining the progress being made towards the implementation of Universal Credit.

Atkin warns strict Universal Credit qualifying criteria – which would see the self-employed having to report earnings every month as oppose to every year – could “totally undermine” the trust’s efforts to develop and nurture social enterprise through its support to small businesses.

The Department for Work and Pensions (DWP) has indicated that around 910,000 households on tax credits receive some income from self-employment.

From next year, tax credits - alongside income-based jobseekers allowance, income support, income-based employment support allowance and housing benefit – will be rolled into a new Universal Credit which will be paid monthly to claimants.

It is anticipated there will be an increase in self employed earners under Universal Credit due to the strict ‘claimant commitment’ – which sets out the steps claimants must take to move into (or closer to) work.

However, perversely, Atkin warns the regulations could act as a disincentive through a decrease in people opting out of self-employment as a route to employment due to the strict qualifying criteria in the new benefit regulations.

He said: “The regulations state that self-employed earners will be required to report their earnings on a monthly basis using an online tool. The associated guidance goes on to state that a ‘message will be sent to the claimant towards the end of the assessment period’. This suggests that the claimant will have access to an email account or will receive this message by text. Any self-employed claimant must therefore by implication own or have access to a computer to enable them to report these changes and also be able to produce monthly accounts and possess book keeping skills.

“The guidance notes state that, ‘the system has been designed to make it possible for claimants to report monthly without employing an accountant'. However if a report is seven days late, the claim for Universal Credit will be suspended. Furthermore, if it is more than four weeks late then the claim will be terminated unless good cause can be provided to explain the delay.

“There could be a wide variety of reasons why a claim is not submitted such as illness, IT issues/ problems etc. This could result in an increasing number of self-employed claimants’ entitlements being suspended/terminated leading to under or over payments accruing and causing additional financial burden.”  

The Chartered Institute of Taxation also said the new plans would impose “a significant additional burden on the self-employed”.

Atkin added that as a result of a recent change in tax credit legislation – whereby a couple must work 24 hours compared to 16 hours in total in order to claim for tax credits – many claimants are unable to gain the extra nine hours through their current employer and were encouraged to become ‘self-employed’.

He said: “In this situation and bearing in mind the strict requirements attached to self-employed claimants for Universal Credit many couples may well be discouraged from taking this course of action.”