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Self-employed face COVID-19 grant clawback

Many self-employed U.K. taxpayers dealing with the economic impact of the COVID-19 crisis face significant clawbacks of income support payments because of complex universal credit rules, a welfare benefits expert warned.

The surplus earnings rule for universal credit presents a “real and urgent problem for a rapidly increasing number of people,” according to Gareth Morgan, director of Cardiff-based Ferret Information Systems.

HM Revenue & Customs announced on May 27 that 2.3 million claims with a total value of £6.8 billion have been made under the self-employment income support scheme. The grants are taxable and will be treated as earnings for the purpose of universal credit, a means-tested benefit. My news story for Tax Notes, May 27 (free to view):

U.K. Self-Employed Face COVID-19 Grant Clawback

Update May 31: The Department for Work and Pensions published on May 29 its response to the Social Security Advisory Committee’s letter concerning the operation of the surplus earnings rule.

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