Yes, you can claim Universal Credit if you are self-employed. Your payment is worked out differently from an employee’s. The government sets an amount it expects you to make, called the minimum income floor. If your business earns less than that, your payment is usually based on the floor, not on what you really earned.
That one rule is the thing to understand before you rely on Universal Credit as a self-employed person. The rest of this page explains it, and the protections around it.
Can you claim Universal Credit if you’re self-employed?
Yes. Universal Credit is there for people on a low income, including if you work for yourself. You claim it the same way as anyone else.
What changes is how your payment is calculated, and whether you are treated as “gainfully self-employed”. Both are explained below.
What is the minimum income floor?
The minimum income floor is an assumed level of earnings. GOV.UK describes it as an amount “based on what an employed person on minimum wage would expect to earn in similar circumstances”.
It works in one direction. If you earn more than your minimum income floor, your Universal Credit is based on what you actually earned. If you earn less, your payment is usually worked out as if you had earned the floor, not your lower real figure. That is why a quiet month can leave a self-employed claimant worse off than an employee on the same income.
Your own figure depends on your age and the hours you agreed with your work coach, so there is no single number. Citizens Advice sets out the method: the minimum wage for your age, multiplied by your expected weekly hours, multiplied by 52, divided by 12. For a figure for your circumstances, use the benefits calculator on GOV.UK.
Are you “gainfully self-employed”?
The minimum income floor only applies if the DWP decides you are “gainfully self-employed”. This means your self-employment is your main job, you work at it regularly, and you expect it to make a profit.
Being gainfully self-employed has an upside. As GOV.UK puts it, you “do not have to look for other work and can concentrate on growing your business”. If you are not treated as gainfully self-employed, the floor does not apply, but you may be expected to look for other work.
Your first 12 months: the start-up period
New businesses get a break. GOV.UK says you “may be eligible for a 12 month start up period if you’re self-employed”. During it, the minimum income floor does not apply. Your Universal Credit is based on what you actually earn while you build the business up.
There are limits. According to Citizens Advice, you will not get a start-up period if you have already had one for any business in the last 5 years. So the protection is for a genuinely new venture, not a returning one.
How do you report your earnings?
You report every month. At the end of each monthly assessment period, GOV.UK says you report “how much you earned from self-employment, even if it’s nothing”, plus your business expenses.
Allowable expenses include, in GOV.UK’s words, “travel costs, stock, equipment and tools, protective clothing and office costs”. Keeping simple records through the month makes this quick rather than stressful.
What if you’re too ill to work?
Self-employed people cannot get Statutory Sick Pay. GOV.UK says that to qualify for it you must “be classed as an employee”, which rules out working for yourself.
Universal Credit is the main safety net if illness stops you working. Whether the minimum income floor still applies while you are ill depends on your circumstances. Tell your work coach and check your claim rather than assume.
Could training help your income?
If your self-employed income is low, a course can help you add a service, move into steadier work, or pick up employed hours alongside the business. Many courses are free if you claim Universal Credit.