People across the country are struggling to keep afloat as the cost of living crisis continues.
Those on low income are able to claim Universal Credit to support them but what about people who are self-employed? Fortunately, if you’re self-employed and you are struggling financially, you may be able to claim help through Universal Credit.
Monthly UC payments could provide valuable assistance with living costs while you look to build up your earnings through self-employment. To claim Universal Credit, you’ll be expected to provide proof to the Department for Work and Pensions (DWP) that you’re gainfully self-employed, reports Birmingham Live. Here’s what you need to know.
Read More: DWP answers 10 questions about cost of living payments including dates and affect on benefits
Can you claim Universal Credit if you’re self-employed?
If you’re self-employed and on a low income, you may be able to claim Universal Credit. You will be required to provide documentation proving that self-employment accounts for your main job and income source.
The DWP will expect you to prove that self-employment provides you with regular work, and that you expect to make a profit from it. You will need to provide documents to back this up, including accounts, invoices and receipts.
How much is Universal Credit if you’re self-employed?
If you’re a self-employed Universal Credit claimant, the DWP will assume that you’re earning the same as someone of your age who is in paid employment and your payments will be calculated on this basis. This is usually equivalent to the minimum wage for your age group, and is called the ‘minimum income floor’.
If your earnings are less than the minimum income floor, Universal Credit will not make up the difference and you may need to seek extra work to top up your income. However, if your earnings are more than the minimum income floor, your UC payments will be calculated according to your actual income.
What’s the minimum income floor for Universal Credit?
Self-employed Universal Credit claimants are treated by the DWP as if they’re earning a specific amount. This is referred to as the minimum income floor, and is equivalent to the earnings of someone in your age group working full-time (35 hours, unless you have other responsibilities) on the national minimum wage.
However, if you’re newly self-employed, you’ll be given a start-up period of up to 12 months when you won’t be expected to seek or make yourself available for other work. You will, nevertheless, be asked to provide DWP work coaches with proof that you’re building up your business and striving to boost your earnings from self-employment.
How to register as self-employed
If you’re self-employed, you can register as a sole trader online via the UK government’s website. If you earned more than £1,000 from self-employment during the most recent tax year, you need to prove you’re self-employed or you want to make voluntary Class 2 National Insurance contributions, you will need to set up as a sole trader.
Every year, you will need to submit tax returns based on your income and business expenses. Depending on how much money you make, you will need to pay income tax on your profits, as well as Class 2 and Class 4 National Insurance contributions.
How to apply for Universal Credit if you’re self-employed
You can apply for Universal Credit online. You’ll need to provide information including your bank details and proof of identity, as well as details of your earnings, housing situation, savings and investments, and any health conditions that affect your work.
Read Next:
DWP announces exact dates PIP Christmas payments will be paid into your bank account
Four ways you can save cash and cut bills this winter, according to consumer rights expert
Can you go on holiday while claiming Universal Credit? Here's everything you need to know
DWP Universal Credit benefit claimants can get 30 free things - including energy bills discount
Universal Credit hardship payments - how to apply for emergency cash as thousands sanctioned
