The move comes the day after the Trades Union Congress (TUC) and Federation for Small Businesses (FSB) called on the government to scrap the ‘flawed formula’ which could reduce the amount of Universal Credit self-employed people can claim.

The ‘Minimum Income Floor’ assumes claimants are earning the equivalent of the National Minimum Wage or National Living Wage. But, many self-employed people are earning significantly less.

The government suspended the Minimum Income Floor in March but it was due to be re-instated on 13 November.

But Thérèse Coffey, the secretary of state for work and pensions, has now announced that the Minimum Income Floor will be suspended until the end of April next year.

The further suspension means self-employed people will continue to receive crucial financial support from Universal Credit based on their current actual earnings.

Coffey said: “This government has taken decisive action throughout the pandemic to support the self-employed and is continuing to do so.

“We have always been clear that easements would be reviewed as public health guidance and the national working environment changes. Extending the Minimum Income Floor suspension ensures these workers have security from the welfare safety net throughout the winter.”

Mike Cherry, FSB national chairman, said: “It’s good to see the government taking further action to support our embattled self-employed community. We wrote to Thérèse Coffey alongside the Trades Union Congress last week calling for a delay to the reintroduction of the unfair MIF and thankfully swift action has been taken. Delaying its reinstatement until April marks a much-needed step forward. Its suspension should now be made permanent.

“This hugely welcome intervention will help protect the welfare of business owners and freelancers who are not blessed with ready access to funding. Many need the flexibility facilitated by self-employment in order to continue making wider community contributions, not least where caring responsibilities are concerned.

“With the unemployment rate continuing to rise, we have to encourage more of those who are out of work to consider the sole trader route – the self-employed community was fundamental to our recovery from the last recession.

“That starts with reforming the Universal Credit system so it reflects the realities of starting a new enterprise: profits can take years to generate and monthly incomes can fluctuate.”