Universal credit if you’re self-employed

If you’re self-employed and on a low income, you might be able to get universal credit.

Check to see what benefits you’re entitled to.

Proving you’re self-employed

If you’re self-employed and you apply for universal credit, you’ll be invited for an interview at your local jobcentre. At this interview, the Department for Work and Pensions (DWP) will decide whether you’re ‘gainfully self-employed’.

In other words, they’ll want to know if the self-employed work you do is:

your main job or source of income
regular
organised
likely to make a profit

You can demonstrate this by providing evidence including:

tax returns
your business plan
accounts
your unique taxpayer reference (if you’re registered for self assessment)
customer and supplier lists
receipts
invoices
marketing materials e.g. flyers, online ads

If you can show these things, you’ll be considered gainfully self-employed. This means you won’t have to look for other work and can concentrate on growing your business.

If you can’t prove you’re gainfully self-employed, you might need to look for other work if you want to keep getting universal credit.

How much universal credit you’ll get

When you’re self-employed, your universal credit payments can change on a monthly basis, depending on how much you earn.

If your business has been up and running for at least 12 months, your payments may be affected by something called the minimum income floor.

What is the minimum income floor?

Your minimum income floor is the amount you’re expected to earn each month.

If you earn less, your universal credit payment will be worked out as if you have earned your minimum income floor.

If you earn more, your payment will be based on your actual earnings.

How to calculate your minimum income floor

Your minimum income floor is based on the national minimum wage and the hours you work, as agreed with your work coach.

Find your national minimum wage rate.

To work out your minimum income floor, you need to:

multiply the minimum wage for your age group by the number of hours you work
multiply that number by 52
divide that number by 12

The number you’re left with is your minimum income floor, sometimes referred to as your individual earnings threshold.

Will the minimum income floor be used to work out my universal credit payments?

For the minimum income floor to apply to you, you must be in:

gainful self-employment
the all work-related requirements group

If you’re not, your actual earnings will be used to work out your payments instead.

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Self-employed and too sick to work

If you’re too sick to work, your actual earnings might be used to work out your universal credit payments instead of your minimum income floor.

If you find yourself in this position, call the universal credit helpline. Tell them about your situation and the length of time you expect to be sick. Your gainful self-employment status may change under these circumstances.

If you're ill for more than seven days, you’ll need to get a fit note from a healthcare professional and add it to your online account.

If you get a printed fit note, check that the healthcare professional has signed it.

If you get a digital fit note, check that it includes the healthcare professional’s name.

If the healthcare professional hasn't either signed your fit note or included their name, it could be rejected and you might have to get a new one.

Is the minimum income floor used for couples?

The minimum income floor applies to couples but the way it works is slightly different.

If you’re living with a partner, both your earnings will be taken into account when deciding whether to use the minimum income floor.

You’ll need to work out both your own and your partner’s minimum income floor and add them together. This is your couple’s earnings threshold.

If you and your partner have earned more than your couple’s earnings threshold, your actual earnings will be used to work out your universal credit payment.

If your combined earnings are less than your couple’s earnings threshold, your individual minimum income floor will be used instead. It’s possible that your partner’s earnings could reduce your minimum income floor.

Universal credit start-up periods

If you’re gainfully self-employed, you may be eligible for a 12-month start-up period. Ask your work coach about this.

During a start-up period, your monthly earnings will be used to work out your universal credit payments rather than your minimum income floor.

You’ll also get:

support from a work coach who’s trained to work with the self-employed
quarterly appointments with your work coach, where you’ll provide evidence to show that you’re still gainfully self-employed and actively taking steps to build your business

You’re only entitled to one start-up period unless it’s been more than five years since your last one and you’ve started a different type of self-employment.