This post may contain affiliate links. This means I might receive a small commission, at no additional cost to you, if you click and decide to make a purchase. Thank you for supporting my blog.

The New Enterprise Allowance Scheme (‘NEA’) is a government initiative to help unemployed people to:

So if you are out of work this can take you from job seeker to business owner.

What is the New Enterprise Allowance?

The NEA provides mentoring and financial support to eligible people while they get their business idea off the ground.

It’s available to anyone who is over 18 and:

  • either they or their partner is receiving Universal Credit, Jobseeker’s Allowance or Employment and Support Allowance
  • receiving income support and a lone parent, sick or disabled.

Initially, support is provided to help explore your business idea and its viability. Then you’ll receive help from a mentor to create a business plan.

Once your business plan is approved, your weekly allowance begins.

How Much Will You Receive?

You get £1,274 over 26 weeks. It’s normally paid out at a rate of £65 per week for the first 13 weeks and £33 per week for the next 13 weeks.

In addition to the New Enterprise Allowance, you can apply for a government-backed 5 year Start Up Business Loan through Start Up Loans.

Remember, just because you have been accepted for the NEA it doesn’t automatically mean you are approved for a Business Loan.

You’ll need to apply for this loan separately, using your business plan and have your creditworthiness assessed.

How to Apply for the New Enterprise Allowance Scheme

If you want to apply for the NEA, then you’ll need to talk to your Jobcentre Plus work coach. They’ll help you check your business idea and work out if you’re eligible and its impact on things like universal credit or job seekers allowance.

How Does the New Enterprise Allowance affect Universal Credit and Job Seekers Allowance

Whilst your universal credit will not be affected, you will stop receiving job seekers allowance.

You can continue to claim JSA while you work on your business plan, but once you start your business your JSA will stop and be replaced by your weekly NEA payment.

It’s also worth noting that NEA does not affect:

  • Housing benefit
  • Council tax benefit
  • Tax credits

Is the New Enterprise Allowance Taxable?

No, any NEA money you receive is exempt for income tax, Class 4 National Insurance (but not Class 2 National Insurance) and tax credit purposes.

What to Include in Your NEA Business Plan

Your assigned mentor will provide you with guidance on preparing your business plan. But as a minimum you should make sure you include:

  • A full description of your business idea;
  • When you plan to start your business;
  • A financial plan showing your incomings and outgoings;
  • A personal budget plan including your income and how that will cover your personal costs;
  • How you will repay your business loan, if you plan to take one out;
  • Demonstrate your business is sustainable.