Working out what benefits you can claim while self-employed can be confusing. It’s sometimes hard to tell what you’re entitled to, and how much you’ll get, especially as self-employed people’s earnings tend to fluctuate.
Universal Credit is designed to help those on a lower income or who are out of work. From the end of the 2024/25 tax year, it began replacing other benefits.
Keep reading to see if you’re now eligible for Universal Credit – plus how much you might get.
What is Universal Credit?
Universal Credit is a payment made monthly (or twice a month for some people in Scotland) that’s intended to help with living costs for people on low incomes and those who are out of work.
Universal Credit replaced six previous UK benefits, including:
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment Support Allowance
- Working Tax Credit
Universal Credit increases
Universal Credit will increase by 1.7 per cent from April 2025. This is in line with the Consumer Price Index (CPI). This means that the monthly standard allowances will become:
| Circumstance | 2025/26 Universal Credit payment |
| Single and under 25 | £316.98 |
| Single and over 25 | £400.14 |
| Living with a partner and both under 25 | £497.55 |
| Living with a partner and one of you is 25 or over | £628.10 |
Who is eligible for Universal Credit?
You may be eligible for Universal Credit if:
- you’re on a low income or currently out of work
- you’re aged 18 or older
- either you or your partner are below the qualifying age for the State Pension Credit
- you and your partner have combined savings of less than £16,000
- you live in the UK
Universal Credit migration
If you previously received another form of benefits, you may be wondering how you go about moving from Working Tax Credits to Universal Credit.
Those already receiving Working Tax Credit should have received a Migration Notice letter. You’ll need to claim your Universal Credit by the deadline given in this letter.
Those receiving tax credits are able to claim Universal Credit even if they have more than £16,000 of savings and investments. However, the regular eligibility requirements will apply after 12 months – and you’ll no longer be eligible if you still have more than £16,000 after this point.
You’ll also be unable to claim Universal Credit if you have more than £16,000 and apply after the deadline listed in your Migration Notice.
Self-employment and Universal Credit
Universal Credit is also available to self-employed people, provided they meet the criteria set out above. However, the process for claiming Universal Credit, and the amount you may get, is different. This includes company directors, even if they pay themselves through PAYE.
However, the process for claiming Universal Credit, and the amount you may get, is different.
It’s important to understand that Universal Credit is only available to those whose self-employment is their main source of income. This means that you get regular work from being self-employed and that you expect to make a profit.
To prove this, you’ll need to show your work coach:
- your tax returns, accounts, and business plan
- your Unique Taxpayer Reference used for Self Assessment
- your customer and supplier lists, receipts and invoices
- any marketing materials
You must report your earnings at the end of each assessment period, which is normally monthly. You also have to report your expenses each period, along with what the money was spent on, plus tax, National Insurance, and pension contributions.
If you are deemed to be gainfully self-employed, you won’t have to search for other jobs as you would otherwise. Instead, you can focus on building your business.
Universal Credit self-employed amount
Self-employed Universal Credit payments fluctuate with their income. The amount you get will also depend on other factors such as whether you’re in a couple or have children.
Your payments will be affected by something called the ‘minimum income floor’. Each month the DWP will look at your expected earnings, and how much you earned in reality. Your expected earnings are the minimum income floor, and this figure will play a role in determining your payments.
The minimum income floor only applies to those who are in the ‘all-work-related requirements group’, meaning those who are expected to either work or look for work. There are some exceptions. For example, the minimum income floor won’t apply if you:
- have been assessed as having limited capability for work or work-related activities
- look after a child under the age of three
- are pregnant or have given birth within the previous 15 weeks
- are caring for a person with severe disabilities
- are in full-time education
- are in the first 12 months of self-employment (known as the start-up period)
- are temporarily too ill to be in gainful employment, and this is affecting your profits
If you earn more than your minimum income floor, your Universal Credit will be ratcheted down as your income rises – so the more you earn, the lower your payments will be.
However, if you earn less than the minimum income floor, your Universal Credit payment will be calculated as if you’d earned the minimum income floor amount – that is, your payment will not go up even if your earnings fall below the floor.
It’s not possible to say exactly how much a self-employed person’s Universal Credit payments will be in advance. However, to get a rough idea, you can use one of the benefits calculators listed here.
What if I’m newly self-employed?
If you’re in your first 12 months of self-employment, you may be eligible for a ‘start-up period’. During this period, which can last up to 12 months, the minimum income floor doesn’t apply. You can also benefit from guidance from a work coach to help you develop your business. You’ll need to meet with your work coach at least once a quarter, and you may need to provide evidence to prove that you’re still gainfully self-employed.
More business guides for the self-employed
- Access to Work: a self-employed guide to disability grants
- Self-employed holiday pay: what are you entitled to?
- Sick pay for self-employed people
- What type of business insurance do I need?
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.