Claiming Universal Credit When Self-employed

This guide explains how to claim Universal Credit if you are self-employed (UC). The information covers the eligibility criteria, how to report your earnings, and how start up periods work.

Universal Credit can provide a monthly payment for people who are in self employment (e.g. to help cover their essential living costs).

Furthermore, the payments apply to certain self-employed individuals who are at least eighteen years of age but below State Pension age and are (either):

  • Getting a low income.
  • Out of work.
  • Unable to join the workforce.

You can check other sections relating to benefits and allowances to find out whether you meet the eligibility criteria and how to apply for Universal Credit.

Note: You should follow a different set of guidelines for claiming Universal Credit if you are living in Northern Ireland.

Self-employment Income and Earnings

You will need to provide some information to HM Revenue and Customs (HMRC) relating to your income and earnings.

So, when each monthly assessment period comes to an end, you will have to report:

  • The amount that you earned from being self-employed (even if you didn’t earn anything).
  • Certain information and details about your business.
  • Whether you paid any money into a pension (and the amount).

The same reporting rules also apply to company directors (including those who are using the PAYE system to pay themselves).

Information about the Business

The information that you need to report about the payments made into your business (and out of) during the assessment period, will include:

A simple guide to self-employment and Universal Credit.
  • How much the business received and paid out for different expenses, such as:
    • Stock
    • Equipment
    • Tools
    • Travel costs
    • Clothing
    • Office costs
  • How much the business paid out for tax and National Insurance.

There is no need to report business assets (things that the company already owns). Typical examples include buildings, machinery, and cash held in the company account.

Universal Credit for Self-employed: Payments

So, how do HMRC work out the Universal Credit payment for claimants who are self-employed?

Generally, they will calculate payments based on a Minimum Income Floor (e.g. an assumed level of earnings reported at the end of each monthly assessment period).

Note: HM Revenue and Customs introduced some temporary changes for people who are already receiving Universal Credit – due to the coronavirus outbreak in the United Kingdom.

Being Self-employed and Employed

HMRC will calculate Universal Credit payments based on the combined earnings for people who earn money from both – self-employment and regular employment.

Reporting Changes to Your Circumstances

You must report a change in your circumstances, such as if you:

  • Close down the business.
  • Start operating a different kind of business.
  • Take on a permanent job.
  • Become unable to work.

Has the coronavirus pandemic (COVID-19) affected your business?

HM Revenue and Customs launched a grant through the Self-Employment Income Support Scheme to help support self-employed workers (or members of a business partnership).

Check the GOV.UK website to find out more about using the Self-employment Income Support Scheme if you have been adversely affected by coronavirus (COVID-19).

Note: Self-employed people who get the grant may have their Universal Credit payments go down or stop altogether.