New Enterprise Allowance – What it Means?

The New Enterprise Allowance (NEA) specifically aims to help unemployed people in the long term. This scheme allows them to set up their own new business. If you already have a business plan, you will be eligible for a weekly allowance of £1274 every 26 weeks.

Use the quick links below to jump to any section of this guide easily:

• New Enterprise Allowance- How It Operates?
• Updated Changes and Benefits of New Enterprise Allowance
• Is There Any Need To Change the NEA?

New Enterprise Allowance- How It Operates?

The government has set some guidelines for this scheme. You need to be above 18 years old to receive the following benefits.

• Jobseeker Allowance
• Employment and Support Allowance
• Income support (if you are sick or disabled or a lone parent)

If you are self-employed and get universal Credit, you are eligible for New Enterprise Allowance. This will help you develop your business plan, get support and monitoring for up to 52 weeks, and apply for a loan for your startup if your business is less than two years old.

As a new business owner, an appointed business instructor will guide you through the process. He will also explain how a small new business can work for you.

Updated Changes and Benefits of New Enterprise Allowance

The updated phase of the NEA will contain the same elements as the previous ones delivered by private providers. It will also involve a pre-assessment stage section known as “Link Up” and Startup. This will help applicants learn more about the implications and responsibilities of being self-employed and the difficulties they may face with income.

The new NEA is related to Universal Credit, allowing providers to help their clients raise their income to meet the minimum income floor. The minimum income floor relies on the number of hours you work, up to 35 hours weekly multiplied by the minimum wage. If you earn less than this, you are restricted to having the difference made up by a larger Universal Credit Payment.

This change means increasing NEA support for existing self-employed claimants on Universal Credit, especially for those finding difficulty getting the Minimum Income Floor. The Department for Work and Pensions can face increased assistance requests as around 40% of full-time self-employed individuals earn below the Minimum Income Floor.

Is There Any Need To Change the NEA?

Yes, some concerns need to be addressed. Below are the points that need to be sorted out.

• NEA claimants are paid £65 a week for the first three months, which cuts out to £33 a week for the following three months.
• The report refers to an ‘abrupt cliff edge’ and recommends a slow reduction over an extended period as a more practical approach.
• Most businesses take more than three months to achieve their goals. So, the NEA needs to help companies to succeed and extend their duration.
• The average NEA payment over six months is 25% less than the amount job seekers receive under the allowance.