Claiming Universal Credit For Self Employed

If you’re self-employed and expect your earnings to fluctuate from month to month, universal credit can top up your earnings to ensure you hit the minimum Wage for the hours you have worked.

You must provide DWP with your monthly earnings figures seven days before your universal credit payment date to ensure you receive your benefits.

You will need to be below the minimum income floor to be eligible for a payment for that month.

What Is the Minimum Income Floor?

Your work coach will let you know what your income floor is. It is usually the number of hours you dedicate to being self-employed a week.

If your agreed hours are 40 hours per week, your minimum income floor would be 40 x £10.42 = £416.8, so monthly, that would be £1,806.13.

The minimum income floor is what the DWP use to calculate whether you are eligible for additional benefits for being self employed.

You can work out if you have reached the minimum income floor by dividing your monthly earnings by your work hours. If your earnings are less than the minimum Wage per hour, you may be eligible for additional benefits from universal credit.

Example: Paul is a self employed web designer. He works on average 40 hours per week and generally earns above the national Minimum Wage.

Paul’s income: £2,800 (Month)
Worked Hours: 160 (Month)
Average Earnings Per Hour: £17.50

Because Paul’s earnings are above the national Minimum Wage of £10.42 per hour, he wouldn’t be entitled to additional benefits to top up his monthly earnings.

Example: Jenny is a self employed hairdresser. She works from home and makes herself available at least 25 hours per week. Her average earnings are generally below the national Minimum Wage.

Jenny’s income: £300 (Month)
Worked Hours: 100
Average Earnings Per Hour: £3.00

Jenny’s earnings are below the minimum income floor. She is entitled to additional benefits from DWP.

Because Jenny is (32) the minimum Wage is £10.42 per hour, so she earns below the minimum Wage.

Jenny’s minimum income floor would be 25 Hours per Week x Minimum Wage of £10.42 = £1,128.83. Jenny would be entitled to an additional £828.83 for that qualifying period.

Universal Credit Self Employed Calculator

Start Up Period

You can still apply for universal credit if you have only recently set up your business. You’ll be eligible for a 12 month start-up period where the minimum income floor will not apply.

In the first 12 months, you’ll be expected to grow your business to earn at least the national minimum Wage for the hours you have worked.

You can offset the costs required to start your business and will not be expected to earn a minimum income.

If you are not eligible for the self-employed income support because you don’t have any tax returns for the qualifying period or you have only just become self-employed, you will need to apply for universal credit.