You are now leaving the Turn2us site. Turn2us is not responsible for content on third party sites.



Self employment and benefits - Universal Credit and self employment

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.

Universal Credit and self employment

Self-employed people can get Universal Credit if their income and capital are low enough. 

Some of the main issues for self employed people include:

Face-to-face interviews

When you make a claim for Universal Credit, you will have to attend a face-to-face interview. You will need to show that your self employment is organised, developed and carried out regularly in expectation of profit. It must also be your main form of employment. If you cannot demonstrate these things, you will need to agree to look for and be available for other work in order to claim Universal Credit.

Minimum income floor

When you are self employed and you claim Universal Credit, you are treated as if you are earning a certain amount. This amount is called the 'minimum income floor'. If the minimum income floor applies to you and you earn below this level in any month, you are treated as earning the minimum income floor. If you are earning more than the minimum income floor, your actual earnings are taken into account instead.

Some people are exempt from the minimum income floor. This might apply to you if

  • You have limited capability for work or work related activity; or
  • You provide 35 or more hours per week of care for a person who receives a disability benefit; or
  • You are over pension age; or
  • You are looking after a child under three; or
  • You are a foster carer or a 'friend or family carer' for a child under 16; or
  • You have had a child placed with you for adoption in the past 12 months
  • You have started your business in the previous 12 months.

The minimum income floor is the equivalent of someone working full time (35 hours per week unless you have other responsibilities) on the National Minimum Wage for your age group. Your minimum income floor will be set according to how much work you would be expected to do according to your circumstances.

Example

John is a self-employed taxi driver aged 35. He has a slow month and only earns  £800. His minimum income floor is £8.21 (National Minimum Wage for 25+ year olds) x 35 (hours per week) x 52 (weeks) ÷ 12 (months) = £1,245.18 per month. This amount would be used to determine his Universal Credit payment for that month, rather than his actual earnings of £800. This means that in this month John would be £200 worse off than someone working as an employee earning the same amount he earned.

Another example

Sally is a self-employed hairdresser aged 24. In her claimant commitment, she has agreed that she can work a maximum of 20 hours per week because she has to look after her son before and after school. She has a good month and earns £700. Her minimum income floor is £7.70 (National Minimum Wage for 21-24 year olds) x 20 (hours per week) x 52 (weeks) ÷ 12 months = £667.33 per month. Sally's Universal Credit payment that month would be calculated using her actual earnings of £700 rather than her minimum income floor. 

Starting a business while claiming Universal Credit and the minimum income floor

If you start a business whilst you are claiming Universal Credit, the minimum income floor will not apply to you for the first 12 months. This 'start up period' gives you a chance to grow your business. In the start-up period, your Universal Credit payment is calculated based on your actual earnings even if they are lower than your minimum income floor. 

You get a 12 month start up period for the first 12 months of your Universal Credit claim if you started your business less than one year before you started your claim. You can only have one start-up period for each business and you can only have one start up period in every five years.

Managed migration and minimum income floor

If you are moved onto Universal Credit through managed migration, the minimum income floor won't apply for the first 12 months of your Universal Credit claim.

Monthly reporting

If you are self employed, you will have to supply 'cash-in and cash-out' figures to the Department for Work and Pensions (DWP) for each month-long assessment period. If you fail to supply these figures between seven days before and 14 days after each month, your Universal Credit payment will be suspended.

If you earn enough in a month to mean you don't have any entitlement to Universal Credit, your claim will close and you will need to re-claim Universal Credit.

If you have income in an assessment period that is more than £2,500 over your maximum Universal Credit entitlement, some of this income might be carried over into future assessment periods. If you are affected by this, you should speak to an adviser.

Updated: September 2019

Anything wrong with this page?

Tell us the problem

Please enter your name
Please enter a valid email address
Please enter what you were doing
Please enter what you'd like to report
Please enter the security code shown
Close

Thank you

If you would like to tell us more please visit our contact page

Close

Check benefit entitlement

Find out what means-tested benefits you might be entitled to, including tax credits.

Use the Benefits Calculator

Grant Search

Search our database of grant-giving organisations

Search for grants