Thousands of self-employed people on Universal Credit could see a cut of around £3,200 to these vital benefits next month.
That's because the Government is set to bring back the Universal Credit minimum income floor which it waived at the start of the pandemic.
This is where it gets complicated.
Normally, the self-employed claiming Universal Credit get benefit payments worked out on estimates of what they might earn - as obviously they don't have a set salary.
This revolves around a figure called the 'minimum income floor', which is simply the minimum wage multiplied by the hours you think you will work.
Usually, if you earn below the minimum income floor, that figure is used to work out your benefit instead of what you actually earn.
And if you earn more than the income floor, that figure is used instead.
During the pandemic all of that was dropped as the pandemic started to hit workers and the wider economy.
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Anyone self-employed, on Universal Credit and earning less than minimum wage basically got a top-up for their benefits, which were worked out at least the national minimum.
Now the Government is set to bring back the old rules from next month.
That means many will get less benefits or be forced to work longer hours.
Poverty charity Turn2us said the average cut to a self-employed worker's Universal Credit could be around £3,200 a year.
It estimates that up to 450,000 households could be affected by the change from August.
Turn2us head of external affairs Sara Willcocks said: "Now is not the time to be cutting people's income. We urge the government to keep the minimum income floor suspension, otherwise we risk seeing an increase in poverty this winter."
This is a particular problem for those who have to self-isolate due to Covid, as their Universal Credit will suddenly be based on what they are actually earning and not linked to the minimum wage.
But there is a get-out clause to the rules if you will be severely affected. If you talk to your work coach, they have wiggle room to allow the minimum income level to apply even after the old rules come back - for at least one more year.
The minimum income floor applies if you are working or looking for work, but not within the first 12 months of you working for yourself.
Universal Credit claimants face a double whammy, as almost half of adults claiming it say the extra planned £20-a-week cut means they will struggle to afford food.
Tory ministers are bringing the cuts in from September - despite admitting they've made no assessment of how many kids it will hurl into poverty.
The £1,040-a-year uplift was brought in last April to support workers during the Covid crisis.
Now Turn2us has said the change could throw 500,000 people, including 200,000 children, into poverty overnight.
Nearly one in two (44%) said they would struggle to pay bills, one in three (29%) will have trouble with their rent or mortgage and one in five (20%) will fall into debt.
Furlough is also being tapered off and will come to an end in September.
The government is also pushing ahead with plans to end a £20 per week Universal Credit uplift in September.
A Government spokesperson said: “We are committed to supporting those most in need, spending billions more on welfare, including support for the self-employed.
“We will continue to assess how to best provide support as we build back better.”
