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Self Employment and Universal Credit

This section is a Universal Credit self-employment guide for people who work for themselves. It explains how to claim Universal Credit when self-employed and how to report your earnings.

In most cases, Universal Credit is a monthly benefit payment paid out to help with living costs.

If you are earning a low income or out of work you might meet the Universal Credit eligibility criteria.

Note: There are some differences on self employment and claiming Universal Credit in Northern Ireland.

Reporting Your Self-Employed Earnings

You must report your self-employed earnings at the end of each monthly assessment period if you are claiming Universal Credit.

This rule applies to everyone. It includes workers who pay themselves through PAYE and company directors.

There are several different transactions to report. You must report payments that come into, and go out of, your business in the assessment period. This will include:

  • The total amount that your business received.
  • How much National Insurance and tax you paid (including money paid into a pension).
  • How much your business paid out for different types of expenses (e.g. clothing, equipment and tools, stock items, and office or travel costs).

What Counts as Work for Universal Credit

The Department for Work and Pensions consider all types of work for Universal Credit. In most cases, they would expect you to be available for work. So, they will identify whether you are already ‘gainfully self-employed’.

A simple explanation of gainful self-employment would be a situation whereby:

  • Your main source of employment comes from self-employment.
  • You generate self-employed earnings.
  • The work that you perform is in expectation of profit, developed, organised, and regular.

You must also provide some evidence about the business and your earnings. Your work coach will want to see:

  • Business accounts, tax returns, and any business plan or marketing materials that you developed.
  • The customer and supplier lists for the business, along with invoices and receipts.
  • The Unique Taxpayer Reference (UTR) (if you registered for Self Assessment).

People who are gainfully self-employed will be exempt from UC job search responsibilities. This will allow them to concentrate on growing their business and increasing their earnings.

Anyone who is not gainfully self-employed will need to search for other work. Even so, you must still report any earnings from your self-employment. You can make a request to get reassessed at some point in the future.

Universal Credit Minimum Income Floor

The ‘Minimum Income Floor’ is an assumed level of earnings used for people in gainful self employment. They use the MIF to work out your Universal Credit payment amount once you have been trading for 12 months.

The calculation is ‘broadly’ based on the National Minimum Wage for your age group. It is what they expect an employed person to receive in similar circumstances.

They will base the Universal Credit amount on your actual earnings if you earn more than the Minimum Income Floor. But, the MIF still counts even if your earnings are below it. So, you could try to top up your income by getting extra work.

Both Self-employed and Employed

The Universal Credit award changes for workers who are self-employed and in paid employment at the same time. They would combine your earnings from self-employment and from Pay As You Earn.

Universal Credit Start Up Period

As a rule, they use a start up period for people in the first 12 months of starting a business. During this term, the Minimum Income Floor would not apply.

Instead, they would use your monthly earnings to work out your payment. A work coach trained to work with self-employed workers will also provide extra help and support.


Business Support Helpline | Where to get advice and support when setting up or running a business.

Setting Up a Business | A help guide for workers who are ‘going it alone’ and starting out in business.

They will set up quarterly appointments with your Work Coach – and you must attend them. You will also need to provide some evidence that shows you are still gainfully self-employed. They will want to see that you are taking ‘active’ steps to build up your business.

Note: In most cases, you can only apply one start up period. There is an exception if you start a different type of self-employment 5 years after the previous one.

Reporting a Change in Circumstances

You must report any change in circumstances while you are self employed and claiming Universal Credit. Typical examples include:

Note: The office may need to reassess your gainful self-employment. It would depend on what kind of change of circumstance that you report.

Universal Credit Help Guides

Important: DWP video explains how financial support (up to £7,500) may be available for self employed people whose business has been adversely affected by coronavirus (COVID-19).

Universal Credit Self Employment Guide for the United Kingdom