The implementation date for matching the Minimum Income Floor to the new employee rules for parents of 3 to 12-year-olds was changed from April 2024 to January 2024 on 30 November 20231. The change affects self-employed Universal Credit claimants who are lead carers of children in that age group1.
Under the rules, main carers of children aged 3 to 12 are expected to work, or look for work, for up to 30 hours a week. That is up from 16 hours for parents of 3 and 4-year-olds and 25 hours for parents of 5 to 12-year-olds. Most other people in the same group have 35 hours a week as their expected number of work hours1.
The Minimum Income Floor is the assumed level of earnings used to calculate Universal Credit for self-employed claimants. From January, the level applied to self-employed parents of 3 to 12-year-olds will match the new rules for employees1. The change was confirmed in the Autumn Statement and the implementation date was subsequently brought forward1.
"For self-employed claimants with children aged between 3 and 12 the Autumn Statement confirms that this minimum is increasing, because they must work more hours, causing large losses for some claimants and saving the government £80 million on projected UC spending."
The same Autumn Statement set out other changes to benefits and to National Insurance. All working age benefits will be increased using September's Consumer Prices Index rate of inflation, which was 6.7%, and all pension age benefits using the average annual increase in wages across the UK in September, which was 8.5%1. Class 1 National Insurance will be reduced from 12% to 10% on earnings between £12,570 and £50,270, and Class 4 contributions from 9% to 8% on the same band1. Class 2 National Insurance, currently a flat rate of £3.45 a week paid by people earning more than £12,570 a year, will be abolished, though it can still be paid voluntarily1.
| Measure | Change | Date |
|---|---|---|
| Minimum Income Floor for lead carers of children aged 3 to 12 | Level matched to new employee rules | January 20241 |
| Working age benefits | Uprated by September CPI of 6.7% | April 20241 |
| Pension age benefits | Uprated by September wage growth of 8.5% | April 20241 |
| Class 1 National Insurance | Reduced from 12% to 10% | January 20241 |
| Class 4 National Insurance | Reduced from 9% to 8% | April 20241 |
| Class 2 National Insurance | Abolished | April 20241 |
Why it matters for households
Where actual earnings fall below the Minimum Income Floor, Universal Credit is calculated as though the claimant earned that higher amount, so some households receive less than they otherwise would1. The change was projected to save the government £80 million in Universal Credit spending1.
The National Insurance cut for employees takes effect in January 2024, while the self-employed changes to Class 2 and Class 4 take effect in April 20241. For claimants, part of the gain from lower National Insurance is offset because Universal Credit is reduced as net earnings rise, through the 55% taper1.
What happens next
The Minimum Income Floor change for lead carers of 3 to 12-year-olds applies from January 2024, having been brought forward from April 2024 on 30 November 20231. Working age and pension age benefit uprates, the Local Housing Allowance change, the self-employed National Insurance changes and the extension of the £2,500 Universal Credit surplus earnings threshold to at least April 2025 all take effect in April 20241. From February 2024, those who qualify for a Severe Disability Premium transitional payment will receive an additional amount between £84 and £246 a month, depending on which disability premiums they used to get1.
Sources1 cited
- Autumn statement update November 2023 entitledto.co.uk
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