New to Universal Credit

11. Self-employment

If you are self-employed Universal Credit will provide support to help you grow your business.

To get this support you will need to be able to show that:

  • self-employment is your main job or your main source of income
  • you get regular work from self-employment
  • your work is organised – this means you have invoices and receipts, or accounts
  • you expect to make a profit

If you can show all these things you will be considered to be ‘gainfully self-employed’. If you can’t show all these things you might have to look for other work if you are to keep receiving Universal Credit.

How much you’ll get

If you are regarded as being gainfully self-employed whilst claiming Universal Credit you will not be expected to look, or be available, for other work. This will help you to concentrate on making your business a success.

However, it will be assumed that you are earning the same amount as someone like you who is in paid work. This will usually be what someone of your age would earn if they worked at the National Minimum Wage for the number of hours that you are expected to work or look for work. This amount is called the Minimum Income Floor.

If you earn less than the Minimum Income Floor, Universal Credit will not make up the difference. You may need to look for additional work to top up your income.

If you earn more than the Minimum Income Floor, your Universal Credit payment will be based on your actual earnings.

The Minimum Income Floor will not be applied for up to 12 months after you start self-employment. This is known as a start up period, and during it you won’t need to look, or be available, for other work. But you will need to show that you are taking steps to build your business and increase your earnings when you talk to your work coach.

If you are self-employed and claiming Universal Credit, and are required to stay at home or are ill as a result of coronavirus, the Minimum Income Floor will not be applied for the period of time whilst you are affected.

From 6 April 2020 the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak. New claimants will not need to attend the jobcentre to demonstrate gainful self-employment.

You must report any earnings from self-employment to the Department for Work and Pensions every month.

For more information see Universal Credit for the self-employed

Self-employment Income Support Scheme

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by coronavirus. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month. Read more about eligibility for SEISS

You should not contact HMRC about accessing SEISS now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.

The Self-Employment Income Support Scheme will be treated as earnings in Universal Credit. Your Universal Credit payment will adjust in response to changes in your earnings.

If you need financial help whilst waiting for SEISS, check your eligibility for Universal Credit

Surplus earnings and losses

If you have an online Universal Credit account and are self-employed, earnings or losses from one month can be taken into account when working out how much Universal Credit you receive in a later month.

If you earn more than £2,500 over the monthly amount you can earn before you receive no Universal Credit payment, you are said to have surplus earnings. This may reduce the amount of Universal Credit you receive in later months, or perhaps mean that you can’t get any Universal Credit payment in those months.

If you make a loss in one month, the loss will be stored and taken into account in months when you make a profit. If the profits are not high enough to fully cover a loss, the remaining loss will be carried forward to the next month when you make a profit. A loss will stop being taken into account once all your losses have been accounted for or your self-employed business ends.

If you are gainfully self-employed and subject to the Minimum Income Floor, that will still apply even if you make a loss. In months where you make a loss, your Universal Credit payment will be calculated based on your Minimum Income Floor.

Top