When you run a small business, every penny counts. Staying informed about the benefits available to the self-employed can make a significant difference to your bottom line.
From tax-saving opportunities to government support schemes, understanding these benefits allows you to manage your finances more effectively and avoid unnecessary costs. This guide breaks down the essential information you need to know, helping you stay on top of changes and plan for the future with confidence.
Self-employed benefits – what’s available?
UC – Universal Credit
Universal Credit (UC) has replaced several of the government’s previously existing benefits for most new claimants:
- Child Tax Credit
- Housing Benefit
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Working Tax Credit
UC is a payment to help with your living costs if you’re on a low income or out of work. Most people on Universal Credit receive a monthly amount (some people in Scotland get paid twice a month). If you currently receive the older benefits (known as ‘legacy benefits’), you may receive a ‘Migration Notice’ letter telling you to move to Universal Credit.
You may be eligible if:
- you’re on a low income or out of work
- you’re 18 or over (there are some exceptions if you’re 16 to 17)
- you’re under State Pension age (or your partner is)
- you and your partner have £16,000 or less in savings between you
- you live in the UK
How to apply for Universal Credit – and how much can you get?
Your UC payments depend on your earnings and whether you have children, have a disability or health condition that stops you working, or if you need help paying your rent. If you live with your partner, their income and savings will be taken into account too.
You can use the benefits calculator on the government website to work out how much you’ll get.
The government website has more information on how to claim Universal Credit when self-employed.
Self-employed minimum income floor
The minimum income floor is an assumed level of income used to calculate your Universal Credit.
The minimum income floor might apply to you if you’re ‘gainfully’ self-employed. Essentially this means if being self-employed is your main job, it provides a regular income, and you expect to make a profit. If you earn less than the minimum income floor, your Universal Credit is calculated as if you earned that minimum amount. This usually means you receive less benefit.
If you’re not in gainful self-employment then your payments will be based on how much you actually earn.
Am I eligible for a ‘start-up period’?
If you’re in gainful self-employment and historically haven’t been self-employed before, you may be eligible for a ‘start-up period’ where the minimum income floor won’t be applied for up to one year.
You won’t have to look for employment during this time and your actual earnings are taken into account when working out your UC payments.
Jobseeker’s Allowance (JSA)
Self-employed Jobseeker’s Allowance (JSA) is designed to give support if you’re on a low income, or out of work. Claiming JSA after being self-employed is possible, you just need to understand the category you fall into, and how to apply.
There are three types of JSA – ‘new style’, contribution-based, and income-based. Income-based JSA has been replaced by Universal Credit for most people.
‘New style’ JSA depends on your Class 1 National Insurance Contributions (NICs). As a self-employed person, you usually pay Class 2 and Class 4 NICs, not Class 1. This means you generally won’t qualify for New Style JSA unless you have also worked as an employee in the last two to three years.
How much is Job Seeker’s Allowance?
The exact amount depends on your age. As of the 2024-25 tax year, the rates are:
- up to £72.90 (if you’re up to 24)
- up to £92.05 (if you’re 25 or over)
Employment Allowance – for employers
If you’re an employer, you can reduce your National Insurance contributions by claiming Employment Allowance.
Employers can use the Employment Allowance to reduce their annual National Insurance liability by up to £10,500 a year.
You may be eligible if:
- you’re a registered employer
- you’re a sole trader, limited company or partnership with employees
- your Class 1 National Insurance liabilities were less than £100,000 in the previous tax year
You can’t claim Employment Allowance for off-payroll workers, for example contractors.
Claims can be made through your own payroll software or HMRC’s basic PAYE tools.
Housing Benefit
Housing Benefit is being replaced by Universal Credit, and you can only make a new claim if one of these criteria applies to you:
- you’ve reached State Pension age
- you live in temporary accommodation
- you live in sheltered or supported housing with special facilities such as alarms or wardens
If none of these apply, you’ll need to claim Universal Credit instead.
Working Tax Credit
You can generally no longer make a new claim for Working Tax Credit. Universal Credit has replaced this benefit for most people.
If you already get Tax Credits, you can continue to receive them until you are invited to move to Universal Credit via ‘Managed Migration’.
If you currently receive Working Tax Credit, you must generally work at least 30 hours a week to remain eligible.
Council Tax Reduction
Council Tax Reduction (also known as ‘Council Tax Support’) allows people on a low income to pay a reduced bill, making it another key benefit for the self-employed. You may even be eligible to stop paying Council Tax altogether.
The first thing to do is check how your local council manages council tax reduction on the government’s website, using their postcode checker.
Child Tax Credit (and Child Benefit)
Child Tax Credit
Like Working Tax Credit, this benefit has been replaced by Universal Credit for most new applications.
Child Benefit
A key benefit for families across the UK, you can get Child Benefit if you’re responsible for one or more children under the age of 16 (or 20, depending on their education status).
There is a tax charge if your income (or your partner’s) is over £60,000. This is known as the High Income Child Benefit Charge. The charge increases gradually for those earning between £60,000 and £80,000.
Top tip: even if you don’t want to claim, filling out the form will help you get National Insurance credits, which count towards your State Pension.
Employment and Support Allowance
If you’re unable to work because of an illness or disability, you may be able to claim Employment and Support Allowance (ESA).
Most self-employed people will apply for ‘New Style’ ESA. You’ll need to have paid enough National Insurance contributions (usually Class 2 for self-employed people) in the last two to three tax years.
How much ESA will I get?
While your claim is being assessed, you’ll normally be on one of the following rates for 13 weeks:
- up to £72.90 a week (if you’re under 25)
- up to £92.05 a week (if you’re 25 or over)
After you’re assessed, you’ll be on one of the following rates:
- up to £92.05 a week (if you’re able to go back to work)
- up to £138.20 a week (if you’re not able to go back to work)
Pension Credit
If you’re above State Pension age you may be eligible for Pension Credit. Pension Credit tops up your weekly income, or your joint weekly income if you have a partner.
How much Pension Credit will I get?
Benefit rates change annually. You should use the government Pension Credit calculator to check the exact amount you’ll get. Generally, Pension Credit tops up:
- your weekly income to a minimum guaranteed level (approx £218.15 for single people in 2025-26)
- your joint weekly income to a minimum guaranteed level (approx £332.95 for couples in 2025-26)
Guides and resources for the self-employed
- A budget calculator and guide for the self-employed
- Is business insurance a legal requirement?
- What is ROI and how do you measure it? ROI calculator
- 8 of the best business loans compared
This article is just for guidance. You should always seek independent, tailored advice, for example from your local Citizens Advice Bureau, before taking action.
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