Local Council Tax Support - Entitlement

Minimum Income Floor (Self Employed)

Changes to the assessment of self employment

The Local Council Tax Support scheme for 2016/2017 for working aged claimants has been changed. The changes to Local Council Tax Support have been brought in due to a combination of factors, including: the government transferring responsibility for the scheme to Local Authorities from 2013, continuing major reductions in government grant funding towards the scheme, and the extreme financial challenges faced by the council.

If you have been gainfully self-employed in your business for more than 1 year, you are now subject to a minimum income floor (MIF) based on the national living wage £7.83 per week for those aged 25 years or over as of 1st April 2018).

More information on the changes can be found on our Local Council Tax Support - Scheme web page.

How the minimum income floor is calculated

Section 27 to 29 of the Isle of Wight Council Scheme, sets out the calculation of self-employed earnings. A minimum income floor will be applied in the calculation of Local Council Tax Support if the income from your self-employment is less than 35 hours x the hourly National Living Wage (£7.83) for an ordinary employed worker  - equal to £274.05 per week.  

The Local Authority will use that amount in the calculation of income for reduction purposes. From this figure a deduction of estimated tax, national insurance and half a pension contribution (if being paid) will be used, as if estimating the income of an ordinary employed person. 

For the purposes of the decision notices, the minimum income floor used in the assessment will show as unearned income.

Example

35 hours a week multiplied by the national living wage of £7.83 = £274.05

Minus tax of £9.23

Minus national insurance of £13.45

The minimum income floor would be £251.37 per week

If you are claiming Housing Benefit, self-employed income is still assessed based on your gross income, less any allowable expenses solely in relation to the business. This is because Housing Benefit is calculated in accordance with the Housing Benefit Regulations 2006 and does not relate to Local Council Tax Support. The net income from this assessment would also be deducted from the minimum income floor