Universal Credit if you’re self-employed

Universal Credit is a monthly benefit you can claim if you’re on a low income and need extra support with living and housing costs. You can claim Universal Credit if you are self-employed but you’ll need to show that self-employment is your main work.  

Our Benefits calculator will quickly give you an estimate of what you could get. It’s worth checking even if you don’t think you qualify, so you don’t miss out on vital income you’re eligible for.

If you have to make a claim for Universal Credit, you’ll be invited to a gateway interview at your local Jobcentre Plus office. 

The purpose of the interview is to decide whether your work is your main work. What the Department for Work and Pensions (DWP) calls ‘gainful self-employment’. 

To show you’re gainfully self-employed, the work you do must be: 

• regular 
• organised - this means you have invoices or accounts 
• expected to make a profit.  

At the gateway interview, you’ll also need to show evidence of this showing: 

• receipts 
• your business plan 
• copies of invoices 
• trading accounts from the previous year 
• proof you’re registered as self-employed with HMRC. 

If you don’t show enough evidence, the assessor might decide you’re not gainfully self-employed. 

This means you’ll need to look, and be available, for other work while you’re getting Universal Credit. 

Universal Credit can seem tricky if you’re juggling a business and living on a tight income. But there are things you can do even before you apply to make sure the process is as smooth as possible.

You’re expected to claim Universal Credit and report your monthly income online.

Jobcentre Plus can provide access to the internet or tell you about local places where you can use the internet for free.

If you can’t claim online, face-to-face and telephone support will be available until you can get access to the internet.

Find out where to access online support near youOpens in a new window on GoodThingsFoundation.

It’s good practice to have a separate bank account for your business.

This is especially important with Universal Credit. This is because your payments are worked out for the whole household rather than for you as an individual.

If you’re self-employed, you don’t need to use a business bank account unless you want to.

A personal account might be a cheaper option.

If you’ve been running your business for 12 months or longer when you claim Universal Credit, the DWP will work out your payment based on the minimum income floor. 

This is an assumed level of earnings that’s used to calculate your Universal Credit when your actual earnings fall below it. For a more detailed understanding of how the minimum income floor worksOpens in a new window visit Turn2Us.

• If your business is less than 12 months old, this is called a start-up period and the minimum income floor won’t apply to you for one year. 
• During this period, you won’t have to look for other paid work. 
• You’ll have to attend an interview every three months to prove you’re still gainfully self-employed.  
• You must be doing what you can to increase your earnings. 
• You’re allowed one start-up period every five years. 

• If you’re disabled and/or a single parent you and in the ‘no work-related requirements’ group, or the ‘work-focused interview’ or ‘work preparation’ group the minimum income floor does not apply.

• If you’ve been self-employed for less than 12 months, you’ll be exempt from the minimum income floor for 12 months. 

For more information on claiming Universal Credit, your commitments, sanctions and working while claiming, read the ‘Universal Credit & You’ leaflet on GOV.UK.

If you’re in Northern Ireland, you can download a guide at nidirectOpens in a new window

You must report your earnings to the DWP every month to carry on getting Universal Credit. 

If you don’t supply these figures between 7 days before and 14 days after your assessment date each month, your Universal Credit payment will be suspended. 

You’ll need to do this online by inputting your actual receipts minus: 

• Income Tax 
• permitted expenses 
• National Insurance (Class 2 and Class 4) 
• any pension contributions qualifying for tax relief.

If your expenses for a particular monthly assessment period are unusually high, you can’t offset them against your income in future monthly assessment periods.

This applies even if your expense payments for the month are higher than your receipts.

Is most of your work fewer, larger jobs – where you’re paid in a lump sum on delivery or completion? Then ask your customers whether they’ll allow you to bill at regular intervals, preferably monthly.

If they agree, this will help to smooth out your income from month to month.

Look at your business expenses and see whether you can switch from annual to monthly payments where possible.

For some expenses, such as insurance premiums, you might need to shop around for a provider who doesn’t charge more for monthly payments.

If you’re struggling with business or household debt, the Business Debtline offers a free debt advice service to self-employed people and small businesses in England, Wales and Scotland.