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Self employment and benefits - Can I get self employed tax credits?

If you or your partner are working, or thinking of starting work, as a self employed person you might qualify for welfare benefits to top up your income.

The benefits you are entitled to will depend on a number of things, including your age, the number of hours you work and how much you earn.

Can I get self employed tax credits?

If you work full time and your income is low, you might get Working Tax Credit (WTC). For WTC purposes, full time could mean 16, 24 or 30 hours a week, depending on your circumstances. You will be classed as working full time if:

  • You are single, responsible for a child and working at least 16 hours a week; or

  • You are a couple and responsible for a child and are working at least 24 hours a week between you, with one working at least 16 hours (exceptions apply)

  • You are disabled and are getting, or were recently getting, certain disability related benefits and are working at least 16 hours a week; or

  • You are 60 or over and are working at least 16 hours a week; or

  • You are 25 or over and working at least 30 hours a week.

Your self employed earnings will affect how much you might be entitled to, use our Benefits Calculator to get a Working Tax Credit estimate.  

WTC is worked out by using your income from the previous tax year to estimate what you will be earning in the current tax year. This means that WTC awarded for the current tax year are initially based on your income for the previous tax year. At the end of the tax year, when you get your tax credits renewal pack, you are asked to confirm your income for the tax year that has just ended to see if you received the right amount of tax credits.

This can cause problems if you are self employed and your earnings vary from year to year. If your actual earnings end up being over £2,500 more than what was estimated, you might have been paid too much tax credits, this is called an overpayment and you will have to pay this back.

If your actual earnings end up being over £2,500 less than what was estimated, you might not have been paid enough tax credits, this is called an underpayment and you will receive this as a lump sum.

If you think your earnings this year will be over £2,500 more, or over £2,500 less, than your earnings in the previous tax year, you can inform the Tax Credit office at any time so that they can adjust your current payments if needed. You can do this using an estimate of what you think your earnings will be.

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