If you are self-employed

If you are self-employed you can only apply for Universal Credit in certain postcode areas. Use the Citizens Advice postcode checker to see if you live in one of these areas. 

If you can’t claim Universal Credit, you might be able to claim existing benefits, including Housing Benefit, Council Tax Support and Working Tax Credit.

What counts as being self-employed?

You will only be able to apply for Universal Credit as self-employed if all the following apply:

  • self-employment is your main job
  • you get regular work from your self-employment
  • you can show that your work is organised – e.g. you have invoices and receipts, or accounts
  • you expect to make a profit

If you can’t show all these things you might have to look for other work if you want to keep receiving Universal Credit. 

How much you will get

The amount of Universal Credit you will get will depend on how long you have been self-employed and your circumstances, e.g. whether you’re in a couple or single, or whether you have children or other dependants.  Use an independent benefits calculator to find out how much you could get.

If you've been self-employed for over 12 months 

Your Universal Credit payments will be based on the assumption that you're earning a certain amount through self-employment, this assumed amount is called the ‘minimum income floor’.

It’s calculated using the National Minimum Wage for your age group, multiplied by the number of hours you are expected to look for and be available for work. It also includes a notional deduction for tax and National Insurance.

Your minimum income floor will be worked out when you apply for Universal Credit. See the example below.

Example

Jack is a 30 year old painter who works full time. His individual earnings threshold (i.e. the minimum wage for the number of hours the claimant is expected to work) is based on the national minimum wage of £7.83 an hour for a 35 hour week:

£7.83 x 35 = £274.05 per week

His minimum income floor for any assessment period, using current figures, should therefore be:

(£274.05 x 52)/12 = £1,187.55 minus notional tax and NI (say £98.13) = £1,089.42

The minimum income floor means that you'll get the same amount of Universal Credit even if you make far less than your minimum income floor. So you might have to look for other work to supplement your total income.

Some people will be exempt from the minimum income floor, e.g. if you're a lone parent of a child aged under 5 or caring for a severely disabled person. You're also exempt if you've been self-employed for less than 12 months.

If you've been self-employed for less than 12 months 

If you've been self-employed for less than 12 months, the minimum income floor won't apply to you - your payments will be based on what you actually earn through self-employment. This is called a ‘start-up period’.

During this period, you will not have to look for other paid work. However, you will have to attend an interview every three months to prove you’re still gainfully self-employed and are taking steps to increase your earnings.

After 12 months, your Universal Credit will be reduced if your earnings are less than your minimum income floor.

Moving from existing benefits 

The impact of moving from existing benefits, such as Working Tax Credits, to Universal Credit, depends on how long you’ve been self-employed.

If you’re business has been running for more than 12 months, you’ll be exempt from the minimum income floor for the first six months of your claim.

If you’ve been self-employed for less than 12 months, then you’ll be exempt from the minimum income floor for 12 months.

After you apply

You'll have to go to an interview at a Jobcentre - this is called a 'gateway interview'. The online application system will let you know how to book once you've done your application.

When you go to the interview you'll need to show that you're self-employed, so you need to take things like:

  • your business plan - UK has guidance on writing a business plan if you don’t have one
  • invoices
  • receipts
  • accounts
  • proof that you’re registered as self-employed with HMRC

You might not need all these documents, but you should take enough to show that you are (or intend to be) working as self-employed.

If you don’t show enough evidence, the assessor might decide you’re not gainfully self-employed. This means you’ll need to look for and be available for other work while you’re getting Universal Credit.

Reporting your income

You must report your earnings to the DWP every month to carry on getting Universal Credit. If you don’t supply these figures between 7 days before and 14 days after your assessment date each month, your Universal Credit payment will be suspended.

You’ll need to do this online by inputting your actual receipts minus:

  • income tax
  • permitted expenses
  • National Insurance (Class 2* and Class 4)
  • any pension contributions qualifying for tax relief

Find out more about how to calculate your income for Universal Credit on the Revenue Benefits website.

More information

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