How Does the NEA Scheme Work in the UK?
The New Enterprise Allowance program renders a resourceful combination of money and practical support.
Joining the scheme means you would get a weekly allowance and business mentoring. But, you must be claiming one of the qualifying benefits.
As a rule, you can join the program from the first day you start claiming for JSA or Universal Credit. But, there are some extra qualifying conditions.
Jobcentre Plus refers any interested and eligible candidates to a contracted provider organisation. The next step matches them up with their volunteer business mentor. They will then help them to draw up a business plan.
Individuals can then access the financial support once the plan gets approved and they stop claiming benefits.
New Enterprise Allowance Eligibility Criteria
You need to be over 18 to qualify for the New Enterprise Allowance initiative. You must also be able to show that you have a business idea – and that it could work.
On top of that, you also need to be receiving one of these work-related benefits:
- The Jobseeker’s Allowance (or your partner gets JSA).
- Employment and Support Allowance (or your partner gets ESA).
- Income Support (if you are a lone parent, sick, or disabled).
Note: You may also qualify if you get Universal Credit. This also applies even if you have already become self-employed.
The Jobcentre will assign you a business mentor if you are starting up a new business. The mentor will be able to give you advice and specialist support on:
- How the business enterprise scheme works and who will assess the actual idea. This also applies to business growth potential (e.g. if it is already trading).
- The process of becoming self-employed and how to start working for yourself.
- How to set up a business and start trading.
- Your role in the scheme and your obligations with Jobcentre Plus.
- How much allowance (or loan) you might get and how they will pay for it.
- What happens after the New Enterprise Allowance scheme finishes.
- Please Note: On the 4th of January 2022 the Department for Work and Pensions (DWP) withdrew the New Enterprise Allowance and closed the programme to new participants.
Note: The main section provides further information on ways to find a job and how to get assistance if you are unemployed.
Becoming Your Own Boss
The primary aim of the New Enterprise Allowance (NEA) scheme is to help unemployed people become their own boss.
As a result, it has helped unemployed benefit claimants launch over 200 businesses a week since 2017 (on average).
Government figures released in the past few years show that:
- The NEA scheme has supported 209,000 benefit claimants since its launch date back in 2011.
- It has resulted in more than 130,000 businesses being set up.
- Around 20,000 of these enterprises came to fruition in the last two (2) years.
- People aged over fifty (50) started more than 31,000 businesses.
- Disabled claimants started almost 25% of all businesses (more than 29,000).
- Ethnic minority groups (e.g. a person from a black and minority ethnic (BAME) background) have launched close to 14% of all businesses started since 2011.
The majority of claimants showing their entrepreneurial skills have been older folks and people living in the North West of the United Kingdom.
In fact, almost 20,000 businesses have been launched by benefits claimants in the North West since the scheme took off.
London followed with figures around 15,370, while Yorkshire and Humberside had an entrepreneurial boost of some 13,700 new businesses.
Source: Taken from the Department for Work and Pensions (DWP) press release (archived).
New Enterprise Allowance 2022 Financial Support
You will need to write a business plan and get it approved before you can:
- Get a weekly allowance of £65 per week for 13 weeks. This gets followed by £33 a week for the next 13 weeks. That could make a total of £1,274 (over a 26 week period).
- Receive a loan up to £25,000 to help you with the business start-up costs (after October 2013). You must repay the loan if it gets approved. But, repaying the weekly NEA payments is not a requirement of the programme.
Note: Being part of the Work Programme means you do not qualify for the New Enterprise Allowance.
New Enterprise Allowance payments do not affect your claim for most welfare benefits. There would be no effect on Housing Benefit, Income Tax, tax credits, Universal Credit, or the Access to Work grant.
Self-employed Claiming Universal Credit
Those who are self-employed and claiming Universal Credit may qualify for:
- Help to increase your earnings through business development and a growth plan.
- Ongoing in-depth mentoring support for up to one year to help expand your business.
- A start-up loan for those whose business is under 2 years old.
How the New Enterprise Allowance Works
Individuals who get accepted onto the scheme must meet these three specific conditions:
- Attend all meetings with mentor or mentoring provider organisation. As a rule, they will give you at least 24 hours of notice to attend the New Enterprise Allowance review.
- Perform weekly tasks that help to develop the business proposal.
- You must contact Jobcentre Plus (within 2 days) and inform them if the business idea ceases or the mentoring relationship ends.
Failure to meet these conditions means your benefits could get sanctioned. There may be exceptions where there are valid reasons.
Changing your mind before the scheme starts does not result in a benefit sanction. The same applies if you give a notice of 2 days before leaving the scheme once it is in progress.