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Universal Credit provides an income which is based on each individual claimant’s personal circumstances. This is also the case for self-employed people who apply.
In order for self-employed people to get support from Universal Credit they’ll need to be able to show that:
- self-employment is their main job or their main source of income
- they get regular work from self-employment
- their work is organised – this means they have invoices and receipts, or accounts
- they expect to make a profit
If these elements can be evidenced it will result in the claimant being considered “gainfully self-employed”.
Those who are gainfully self-employed while claiming Universal Credit will not be expected to look, or be available, for other work.
Universal Credit payments for self-employed people were dependent on “Minimum Income Floor” rules but these have been halted due to coronavirus.
However, the earnings and losses of the business will be taken into account when working out payments.
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Earnings or losses from one month can be taken into account when working out how much Universal Credit is paid out in a later month.
If a self-employed person earns more than £2,500 over the monthly amount they can earn before they receive no Universal Credit, they will have what is known as “surplus earnings”.
This may reduce how much Universal Credit is paid out in later months.
If a loss is made, the loss will be taken into account in months where a profit is made, which will all be calculated together for Universal Credit payments.
Most Universal Credit claimants will have their personal assets and wealth taken into account when working out eligibility but the rules here are different for the self-employed.
So long as the claimant is gainfully self-employed, their business assets will not be taken into account when they make a Universal Credit claim.
Business assets can include things like machinery, premises and cash held in a business account.
It should be noted that if a claimant also receives support through the self-employment income support schemes their Universal Credit payments may stop or reduce.
Self-employed claimants will need to keep the state update on a monthly basis on any changes in their circumstances or general day-to-day business.
This can include:
- how much they earned from self-employment, even if it’s nothing
- any money they paid into a pension
- information about the business and its nature
- the total amount the business received over a period of time
- how much the business spent on different types of expenses, such as travel costs, stock, equipment and tools, clothing and office costs
- how much tax and National Insurance the business paid
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