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. If it’s a ‘sideline’ to a paid job or something you are just trying out, you still need to declare it to the Department for Work and Pensions (DWP).

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’. 

The gateway interview is the main way the DWP checks that your self-employment is your main job, and the work is organised, sustainable and intended to make a profit. 

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

• sustainable – there is regular work now and in the future 

• 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. 

During the interview, you may be asked about:

• the type of work you do 

• how regularly you work 

• how you find customers  

• your business income and expenses 

• whether you're registered as self-employed with HMRC 

• any records you keep, such as invoices, accounts or receipts. 

If the DWP decides you're gainfully self-employed, you'll usually continue to claim Universal Credit as a self-employed person and report your business income each month.

If they decide you're not gainfully self-employed, you can still receive Universal Credit if you're eligible. However, you may be expected to look for employed work or take part in work-related activities while continuing your self-employment.

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.

Find out more in our guide How to choose the right bank account.

Find out more about Universal Credit for the self-employedOpens in a new window on GOV.UK.

You can also get help on payments if you’re self-employed from Citizens Advice: 

• England Citizens AdviceOpens in a new window
• Scotland Citizens AdviceOpens in a new window
• Wales Citizens AdviceOpens in a new window
• Northern Ireland Advice NIOpens in a new window

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. Some people are exempt from the minimum income floor (e.g. foster carers and some disabled people) and it doesn’t apply for 12 months for anyone who starts-up a new business whilst claiming universal credit. 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.

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 CreditOpens in a new window on the Low Income Tax Reform Group website.

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.

When you report your self-employed earnings for Universal Credit, you can usually deduct allowable business expenses before your income is worked out.

Business expenses are costs for running your business. Personal spending can't normally be deducted. Common business expenses include:

• stock and materials 

• office costs  

• business insurance 

• business phone and internet costs 

• advertising and marketing 

• vehicle costs or business mileage  

• equipment repairs and maintenance 

• rent for business premises. 

You can't usually claim for personal living costs or spending that's not directly related to your business.

To support your figures, keep records such as: 

• invoices 

• receipts 

• bank statements 

• mileage logs  

• accounting records. 

Good record keeping makes it easier to report your income accurately if the DWP asks for evidence.

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.

Call Business Debtline on 0800 197 6026 (Monday to Friday, 9am to 8pm). Or visit Business DebtlineOpens in a new window

If you live in Northern Ireland, find out more about starting your own business and becoming self-employedOpens in a new window on nidirect.