If you’re self-employed, on a low income and need extra help with your living costs you might be able to claim Universal Credit. Find out more about what to expect and how to apply.
What’s in this guide
- Claiming Universal Credit if you’re self-employed
- How do I prove I’m self-employed?
- Get ready for Universal Credit
- Universal Credit and the minimum income floor
- How to apply for Universal Credit
- Reporting your income from self-employment
- How expenses affect your Universal Credit
- Managing your fluctuating income
Claiming 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.
How do I prove I’m self-employed?
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.
Get ready for 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.
Get online
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.
Get a separate bank account
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.
Find out more in our guide How to choose the right bank account
More about Universal Credit if you’re self-employed
Find out more about Universal Credit for the self-employedOpens in a new window on GOV.UK
Universal Credit and the minimum income floor
The minimum income floor 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. For an overview about how Universal Credit works while you are self-employedOpens in a new window visit GOV.UK.
If you’d like further detail – including how to apply and get your documentation ready, visit GOV.UK’s Universal Credit and Self-employment a Quick GuideOpens in a new window
If you’re in Northern Ireland, you can download a guideOpens in a new window on nidirect.
Living in Northern Ireland or Scotland?
In Northern Ireland, Universal Credit works differently. Find out more in our guide How to apply for Universal Credit in Northern Ireland.
In Scotland, you might be offered some choices about how your Universal Credit is paid. Read our guide How to apply for Universal Credit in Scotland.
How to apply for Universal Credit
How to find extra support
If you live in England, Wales or Scotland you can contact the Citizens Advice Help to Claim ServiceOpens in a new window for free, confidential and impartial advice.
Ways you can contact the Citizens Advice Help to Claim support service:
England and Wales
More details at Citizens Advice in England and WalesOpens in a new window
Scotland
Visit Citizens Advice ScotlandOpens in a new window or call 0800 023 2581Opens in a new window.
Northern Ireland
Universal Credit works differentlyOpens in a new window – find out more at nidirect.
Use the British Sign Language (BSL) Video Relay Service to help you with the early stages of your Universal Credit claim.
You can find further information here:
England: visit Citizens AdviceOpens in a new window
Scotland: visit Citizens Advice ScotlandOpens in a new window
Wales: visit Citizens Advice WalesOpens in a new window
Northern Ireland: visit nidirectOpens in a new window
Use our Benefits calculator
If you’re living on a low income or have had an income shock, use our Benefits calculator to quickly find out what you could be entitled to.
Reporting your income from self-employment
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.
Find out more about how to calculate your income for Universal Credit on Revenue Benefits
How expenses affect your Universal Credit
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.
Managing your fluctuating income
Help to Save
If you’re working and on Universal Credit, you might qualify for a Help to Save account. This gives you up to a 50% bonus from the government on your savings.
Find out more in our guide Help to Save explained.
If your income and expenses go up and down from month to month, it’s a good idea to smooth it out as much as possible across the year.
This is especially important with Universal Credit because it’s paid monthly in arrears and based on the minimum income floor.
So, if you have a low income month after a profitable month – the combined total of your earnings and your Universal Credit might be low. This is because if your income falls below the minimum income floor, it won’t be topped up.
To manage your income peaks and troughs, work out the total amount you earn in a year. Make sure you take into account all your expenses. Divide it by 12 to get an average monthly amount.
Whenever you earn more than the average in a month, try to put the extra to one side. This is so you can use it when you have a less profitable month.
Also, don’t forget to plan for infrequent bills, such as Income Tax.
Find out more in our guide How to budget for an irregular income
Ask your customers for part-payments
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.
Review your expenses
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.
Help with the cost of living
Worrying about money because of rising rents, high energy bills or debt? If so, we’re here to help.
Take the first steps to find your way forward with our guides to help you with the cost of living.
Get specialist debt advice for self-employed people
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.
