Can You Claim Universal Credit If Your Self Employed?

In short yes you can, if you’re self employed and you 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 will need to provide the DWP 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?

The minimum income floor is what the DWP use to calculate whether your 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 the hours you have worked, 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.

Pauls Income: £2,800 (Month)

Worked Hours: 160 (Month)

Average Earnings Per Hour: £17.50

Because Paul’s earnings are above the national minimum wage, he wouldn’t be entitled to any additional benefits to top up his earnings for the month.

Example:  Jenny is a self employed hair dresser, she works from home and makes her self available for a minimum of 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 £8.72 per hour, below you will see how the DWP work out the deficit.

Minimum Income Floor: 25 Hours (Week) Minimum Wage £8.72 Total Yearly Income: £11,336 Total Monthly Income: £ 944.66. Jenny would be entitled to an additional £644.66 for that qualifying period because she didn’t reach the minimum income floor.

Universal Credit Self Employed Calculator

Universal Credit Start Up Period

If you have only recently set up your business you can still apply for universal credit, you’ll be eligible for a 12 month start up period where the minimum income floor will not apply to you. In that 12 months you’ll be expected to grow your business to earn at least the national minimum wage for the hours you have worked. Your able to offset costs required to start your business and are not expected to earn a minimum income.

Universal Credit Self Employed

If your business has been directly affected by the coronavirus pandemic you could be eligible for the universal credit self employed grant, this scheme is for established businesses only and you will need to provide 3 months’ worth of profits (Capped at £7,500)

There are currently two grants available to business that qualify, to claim the first grant you must make a claim on or before the 13th July 2020.

You can make a claim for the second grant even if you haven’t claimed for the first. The second grant will be available from the 17th August 2020.

Self Employed Grant

If you make a claim for the self-employed grant you will receive 80% of your profitable income over the last 3 months of your earnings up to a maximum of £7,500. The grant does not need to be repaid but you are required to contribute to income tax and national insurance.

Find out the requirements here

How much is the self-employed grant?

Your self-employed grant can be anything from £1 to a maximum of £6,000

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.