The Govt piles pressure on self-employed mothers

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Mothers often do what they can to fit in some paid work from home around important care responsibilities.  But it’s getting impossible due to Government policies and new legislation affecting the self-employed.

This is one mother’s voice in the form of a letter she has sent to a number of individuals in influential positions (and copied to MAHM), including to representatives in the House of Lords:

‘’I am a single parent trying to run a business and provide for my children and I am very concerned at the changes being brought in to the tax credit system now changing to universal credit for low paid self employed workers.  A very large number of mothers, especially single mothers, are working on a self-employed basis and at the moment they can claim housing benefit, council tax benefit and tax credits should they need them, just as the employed do. Close to 15 per cent of all self-employed people are currently in receipt of this type of benefit.

Mothers are required to work a minimum of 16 hours a week to qualify and their entitlement is worked out yearly based on their tax return. This form of work fits in well with caring responsibilities and job centres and work programmes have been encouraging single mothers to take this option.

However all this is about to change with the transition to Universal Credit and self employed mothers are now being threatened with forced increased hours from 16 to 24-39 a week, quarterly tax returns, monthly reporting to the DWP and a minimum income floor.

This means they will be required to pay themselves the minimum wage for 35 hours a week, which amounts to something in the order of £950 a month, council tax benefit and housing benefit will be worked out assuming a notional income i.e the minimum wage rather than the claimants actual income which is guaranteed to be considerably less.

Claimants will have to prove to a DWP advisor (who may have no business knowledge) that their business is viable or they will lose their eligibility to benefits. This will mean effectively that huge numbers of mothers will be forced to cease self employment. Many will find it difficult to manage the complexity of the new system, especially the monthly reporting of one’s financial circumstances and tens of thousands will move onto the dole overnight when the minimum income floor starts.

My business is profitable and developed, but I cannot afford to pay myself the minimum wage which means that when the minimum income floor is introduced, I will have to close my business and lose everything that I have worked for.

Recent analysis of the government’s Family Resources Survey suggests that 36.6 per cent of all self-employed people would fall below the minimum income floor as it stands (with lone parents worst affected).

It is a horrendous time for self employed mums, these changes are supposed to take effect this year and it is causing a huge amount of stress, panic and fear, there has been little reporting of these changes to self employment and their impact in the press perhaps because of the vagueness and complexity of the whole scheme.

I would be grateful if you could look into this as a matter of urgency. There was huge opposition to tax credit cuts earlier on this year but many people are not aware of the changes for self employed people. If the welfare reform act 2012 was amended so that self employed single parents are once again eligible for tax credits, housing benefit and council tax this would save our businesses.

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