Universal Credit (UC) income and capital - Universal Credit (UC) income: Self-employed earnings
This guide explains the rules relating to income and capital for Universal Credit (UC)
- Last reviewed 30 November 2023
Universal Credit (UC) income: Self-employed earnings
If you are self employed, the Work Allowance and taper rate are the same as for employed people. However, a 'minimum income floor' can be used if you are self employed.
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.
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.
Example: John is a self-employed taxi driver aged 35. He has a slow month and only earns £900. His minimum income floor is £10.42 (National Minimum Wage for 23+ year olds) x 35 (hours per week) x 52 (weeks) ÷ 12 (months) = £1,580.37 per month. This amount would be used to determine his Universal Credit payment for that month, rather than his actual earnings of £900.
Another example: Sally is a self-employed hairdresser aged 22. In her claimant commitment, she has agreed that she can work a maximum of 25 hours per week because she has to look after her son before and after school. She has a good month and earns £1,200. Her minimum income floor is £10.18 (National Minimum Wage for 21/22 year olds) x 25 (hours per week) x 52 (weeks) ÷ 12 months = £1,102.83 per month. Sally's Universal Credit payment that month would be calculated using her actual earnings of £1,200 rather than her minimum income floor.
The Minimum Income Floor doesn't apply to you if you aren't someone who would be expected to look for work. You can read more about that in our Self Employment and Benefits guide.
Start up period
If you start a business while 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.
Started claiming Universal Credit within the past year
The Minimum Income Floor won't apply for you for the first year of your Universal Credit claim.
Proof of self-employed earnings
If you are self employed, you will have to supply monthly 'cash-in and cash-out' figures to the Department for Work and Pensions (DWP).
If you fail to supply these figures between seven days before and 14 days after each assessment period, your Universal Credit payment will be suspended.