Minimum Income Floor for Council Tax Support

From 1st April 2020 a new Council Tax Support Scheme was introduced that changed the way that the Council calculates your/your partner’s self-employed income to bring it in line with Universal Credit by applying the Minimum Income Floor (MIF). The MIF means that you are expected to be earning minimum wage for the number of hours you are expected to work (criteria determined by the Department for Works and Pensions – see below).

If you are earning more than this your actual income will be used, however if you are earning less, then we will use the MIF to apply assumed earnings.

Due to COVID-19, we used our discretion to not enforce the MIF until 1st August 2021 as it was unreasonable to introduce this during periods of national lockdown and government-imposed restrictions.

When calculating self-employed income to see if it is necessary to apply the MIF the Council will use an average of the income earned within the previous 12 months, or a shorter period where this will be more reflective of the on-going income. Reasonable and relevant business expenses will be deducted where necessary to determine whether actual earned income is below or above the MIF level.

If earnings are found to be below the MIF level, the Council will use either the National Living Wage or the National Minimum Wage (whichever is appropriate based on age) multiplied by the number of hours you would be expected to work (see below for more information on this). Estimated Tax and Class 2 and Class 4 National Insurance will then be deducted from the gross earnings to give the net figure which will be used in the calculation.

Because the MIF has already been calculated based on a minimum amount that you could be expected to earn based on your work availability, no business expenses will be deducted from the MIF figure, because the MIF is already the equivalent of a baseline net income. This is based on the premise that if you were employed and not self-employed, you would be entitled to, at minimum, the same basic rate of pay with no expense deductions, and therefore that you should not be worse off on account of employment status.

The MIF will only apply to you if you are in the 'all-work-related requirements group'. This means that you are expected to work or to be available and actively looking for work for the number of hours per week shown in the table below.

You are not in the all-work-related requirements group if:

• you look after a child under 3
• you are pregnant and it is not more than 12 weeks until your due date
• you have given birth in the last 15 weeks
• you are caring for a severely disabled person
• you have been assessed as having limited capability for work or limited capability for work-related activity within Universal Credit or you are in the work group or the support group of Employment and Support Allowance
• you are in full-time education
• you have adopted a child within the last 12 months
• you are a foster parent of a child under 16
• you are a carer for a friend of family member
• you are or recently have been under threat of domestic violence

If you are signed off sick for a prolonged period, the Council will be able to use its discretion in deciding whether the MIF should apply. The Council will also be able to use its discretion where individuals have substantial and genuine cause for not earning the expected levels following a significant change to the business. This will be considered on a case by case basis.

The number of hours that you are expected to work are as follows:

For those with children aged 13 and over or with no caring responsibilities MIF will be calculated if you are earning less than 35 hours multiplied by National Minimum/Living Wage for your age group.

If you are part of a couple, we can only allocate the caring responsibilities to one of you, so if you are self-employed and your partner does not work we would expect you to work 35 hours per week. If your partner was working full time, we would consider that you have the caring responsibility for any children and the amount used for your MIF would be amended accordingly.

National Living wage – anyone aged 21 and over (£11.44ph for 2024/25)

National Minimum wage aged 18-20 (£8.60ph for 2024/25) 

I’m both employed and self-employed. How does this affect me?

We would take your employed earnings into account and deduct them from the MIF amount which would otherwise be applicable to you. Your MIF would then be the difference between the figure quoted above and your employed earned income.

National Living wage – anyone aged 23 and over (£10.42ph for 2023/24)

National Minimum wage aged 21-22 (£10.18ph for 2023/24

National Minimum wage aged 18-20 (£7.49ph for 2023/24) 

I’m both employed and self-employed. How does this affect me?

We would take your employed earnings into account and deduct them from the MIF amount which would otherwise be applicable to you. Your MIF would then be the difference between the figure quoted above and your employed earned income.

If you are signed off sick for a prolonged period, the Council will be able to use its discretion in deciding whether to apply the MIF. The Council will also be able to use its discretion where people have genuine cause for not earning the expected levels following a significant change to the business.

If you believe you have genuine good cause for not earning the National Minimum/Living Wage equivalent or you think that we have applied the MIF in error please contact us in writing or by email to explain why you think our decision is incorrect. We will look at your claim again and will write to you to confirm the outcome of our decision.