Universal Credit for the self-employed - how does it work?
Not sure what’s involved when it comes to Universal Credit for the self-employed? Here’s what you need to know
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Sign up to our newsletter Newsletter

When it comes to Universal Credit for the self-employed, many people who work for themselves don’t realise that they are eligible for it to help with living costs. And with energy, food and fuel costs continuing to rise, it’s crucial to claim any benefits that you are eligible for.
According to Government figures, as of May 2022, there were around 4.25 million self-employed workers in the UK (opens in new tab), many of whom could qualify for Universal Credit.
Laura Suter (opens in new tab), head of personal finance at AJ Bell, said: “Lots of people who are self-employed might not be aware that they can get a top-up to their earnings from Universal Credit. If you’re trying to get your own business off the ground or only working part-time on it, you might not be making enough to live on, but that’s where Universal Credit can help by giving you a bit extra each month to boost your earnings.
“Many people will be struggling unnecessarily on lower incomes when they could be getting support.”
If you aren’t self employed, then check out our guide on who can claim Universal Credit (opens in new tab).
Bear in mind also that if you were receiving Universal Credit (or had submitted a claim that went on to be successful) on 25 May 2022, you will be eligible for the first instalment of the £650 cost of living payment (opens in new tab)pledged by the Government.
Universal Credit for the self-employed - how does it work?
The benefit is designed to support you to pay for living costs while you work to grow your business and earnings are low.
The system is strict to make sure claims are genuine. You’ll need to set up an online Universal Credit account where you will submit your claim. You are required to report your self-employment earnings to the Department for Work and Pensions (DWP) every month to carry on getting any benefit you’re entitled to. Reporting is all done online under the ‘Report your income and expenses’ section of your account.
If you don’t supply these figures in the time period required - between 7 days before and 14 days after your assessment date each month - your benefits will be suspended.
If you started your business less than one year before you started your claim, you get a 12 month start up period for the first year of your Universal Credit claim. That means your benefit is calculated on actual earnings and you will not be required to look for or take up alternative employment during that time.
Can I get universal credit if I am self-employed?
To be eligible you must satisfy criteria to say you are “gainfully self-employed”. To confirm as such, you will need to attend a gateway interview with a work coach at your local Jobcentre Plus office.
For your work to be classed as gainfully self-employed, it should be your main job and the work you do must be regular and organised. You can show evidence of this by taking along copies of invoices, trading accounts or proof you’re registered as self-employed with HMRC by showing your Unique Taxpayer Reference (UTR). You must also expect to make a profit.
If you are gainfully self-employed whilst claiming Universal Credit you will not be expected to look, or be available, for other work.
However, if you cannot provide proper evidence of, you’ll need to look, and make yourself available for other work if you want to keep receiving Universal Credit benefits.
How is Universal Credit calculated if I am self-employed?
Payments are calculated based on an assumed income, called the minimum income floor. This is based on what someone of your age would earn if they worked at the national minimum wage for the number of hours that you are expected to work - or look for work.
If you earn more than this, then your Universal Credit amount is based on your actual earnings. If you earn less, the minimum income floor is used, instead of your actual earnings, to work out how much Universal Credit you can get. You may need to look for additional work to top up your income.
As your earnings go up, the amount of Universal Credit you are entitled to goes down until it hits zero. If your earnings exceed the point at which your Universal Credit payment would be zero by more than £2,500, you are said to have surplus earnings. This may reduce the amount of benefits you receive in later months. Payments could even stop completely for a time.
There are some groups that are exempt from the minimum income floor, however. These include start-ups that are less than 12 months old and disabled and lone parents. Those who are exempt will see payments calculated according to actual income rather than assumed income.
How much can I claim in Universal Credit?
There is no figure for a standard payment for the self-employed. It’s calculated on a case-by-case basis.
Personal finance expert Laura Suter said: “Self-employed incomes can fluctuate more than someone on a salaried job, who will earn the same amount every month. That means there might be periods where you’re not entitled to extra help from Universal Credit. Equally, if you see a dip in income you might be entitled to more support.”
With earnings and benefit payments likely to change each month it can be hard to budget, so you need to be as organised as you can.
What should I do if my circumstances change?
Part of your responsibilities when claiming benefits is to keep the DWP informed of any changes to ensure that you’re receiving the correct amount.
If there are changes to your earnings as a self-employed worker, you must report this by signing into your Universal Credit account and updating your income.
It’s worth reporting straight away because you’ll likely have to repay overpayments made in error. It's also crucial to communicate if there are other changes.
Laura Suter adds: “It’s important to keep the Government up-to-date with any changes to your circumstances, such as deciding to take on an employed job, shutting down your business, or falling ill and not being able to work. The last thing you want is to be paid benefits you weren’t entitled to and then have to go through the process of paying them back.”
-
-
'Pop-It toys are a choking hazard' nurses warn as they share frightening dangers of the popular fidget stimulator
An urgent warning has been issued after part of the toy got stuck in a child's mouth.
By Selina Maycock • Published
-
Beyond Paradise season 2 - Everything we know so far
With the finale just a week away, we've shared details of what show creator Tony Jordan has said of a Beyond Paradise season 2.
By Emily Stedman • Published
-
Can you earn money while on maternity leave? Rules for new mums explained
Make sure you understand the rules around earning money while on maternity leave so you don't jeopardise your maternity pay
By Emma Lunn • Published
-
'Don't just jump on a fix' - Martin Lewis issues urgent energy switch warning
The money saving expert has warned homeowners to be cautious before switching energy tariffs to save money
By Sarah Handley • Published
-
Should the government pay grandparents who provide childcare?
Many parents rely on help from grandparents when it comes to looking after their kids, but should grandparents receive payment from the government?
By Sarah Handley • Published
-
Return to work vs childcare costs: is it financially worth returning to work after a baby?
With childcare costs hitting the headlines, we explore whether it’s financially worth returning to work after maternity leave
By Rachel Wait • Published
-
This is the EXACT date you should turn your heating off for spring, according to experts
Families are wondering when to turn their heating off as we head into spring, after months of high energy bills
By Sarah Handley • Published
-
Who can get maternity allowance and can you claim it on Universal Credit?
If you’re about to have a baby, make sure you know if you can get maternity allowance and whether you can claim it on Universal Credit
By Rachel Wait • Published
-
5 reasons why you should write a will when you become a parent
It's not nice to think about what will happen to your family when you pass away, but it's really important for those you leave behind that your wishes are made official
By Emma Lunn • Published
-
Martin Lewis reveals TRICK he uses to save money on medication
Everyone's favourite money-saving expert reveals how comparing codes on the packaging of medication can help you save money
By Sarah Handley • Published