Self-employed benefits entitlement: what you should know

When you’re running a small business, every penny counts. So it really makes sense to know the facts around self-employed benefits entitlement, and what to keep an eye on for the future.

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Which self-employed benefits should you know about?

From housing benefits to tax credits, and questions like ‘can I claim Jobseeker’s Allowance if self-employed?’, here’s your guide to the benefits that could help, in 2019.

New Enterprise Allowance

If you’re starting your own business, or already run one, you could get mentoring and an allowance benefit.

You may be eligible if you’re aged 18 or over and get Universal Credit, Jobseeker’s Allowance or Employment and Support Allowance (or your partner does). You may also be eligible if you get Income Support and are a lone parent, sick or disabled.

Through the New Enterprise Allowance, you’ll work with a mentor to create a business plan. Once this is approved, you could get a weekly allowance worth up to £1,274 over 26 weeks.

To get started, speak to your nearest Jobcentre Plus.

Universal Credit (UC)

Universal Credit (UC) replaces several of the government’s current benefits, and is being rolled out across the UK in stages. Depending on your postcode, you may need to start claiming UC instead of some of the benefits in this article.

Need more guidance? Your local Citizens Advice Bureau will be able to help you work out whether UC applies to you yet (you can also use the handy UC postcode checker, and it’s important to do this first, before spending time applying for any other self-employed tax benefits.

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. If you’re self-employed, you won’t be eligible for new style or contribution-based JSA, as this type would depend on your Class 1 National Insurance Contributions (NICs). Being self-employed, you don’t pay these. There are a couple of very specific exceptions to this, for more details check gov.uk’s JSA eligibility information.

You may, however, be eligible for income-based JSA. This is means-tested, and an important benefit for self-employed people on low income. Whether you can get it will depend on your age, immigration and education status (part-time students generally won’t be eligible) and crucially, how many hours you’re working every week. If it’s less than 16 you could be eligible.

Remember, even if this is a self-employed jobseeker’s benefit, if you have a partner they’ll need to be working less than 24 hours a week on average, in order for you to qualify.

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’re getting, or are entitled to, the severe disability premium now (or within the last month)
  • 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. The eligibility criteria have also changed for couples, from May 15 2019, so check with gov.uk before you apply.

For people who are still eligible for Housing Benefit, your living arrangements are important. If you live in the home of a close relative, or you’re a full-time student (unless you’re disabled), you won’t be able to claim. You usually won’t be eligible if you have savings over £16,000, or if you’re claiming Universal Credit at the same time.

There are lots of other conditions and things to factor in, and the best place to read up is always gov.uk’s dedicated Housing Benefit page, for the latest guidance.

Get organised now though by having a clean copy of your accounts to hand, or the right details to complete a certificate of earnings form, as well as the Housing Benefits application form.

Working Tax Credit

For most new claims, Universal Credit has replaced Working Tax Credit (WTC). As one of the key self-employed tax benefits for businesses in the UK, WTC and its transfer to Universal Credit is worth a read-up.

If you’re already claiming WTC or meet the new eligibility criteria, you’ll need to be working for more than 30 hours a week (it can be less depending on your age and circumstances), to keep the WTC.

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 of our key benefits 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 this benefit on gov.uk’s website, using their postcode checker. You can apply for the benefit whether you own your home, rent, are unemployed or working, but eligibility and what you get will depend on your circumstances, household income, and whether anyone else lives with you.

Based in Northern Ireland? Here’s some advice on your separate scheme.

Child Tax Credit (and Child Benefit)

Self-employed tax benefits are important considerations for families, too. Whilst we’re here, self-employed tax-free childcare is another key support to look into, so read up on our guide to applying, as well as the benefits below.

Child Tax Credit

This benefit has now been replaced by Universal Credit, for most new applications. If your child is 16, you may be able to claim up until 31 August after ther 16th birthday.

If you still meet the eligibility criteria, your Child Tax Credit is calculated on a number of factors including your income, how many children live with you, their age and whether any of them have a disability.

Check with gov.uk to see if you’re eligible for Child Tax Credit, and how yours will be worked out.

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).

Again, this has its benefits for the self-employed, but you may have to pay a tax charge if your income (or your partner’s) is over £50,000.

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.

Take a look at gov.uk’s Child Benefit overview, to understand what’s important when sorting out your Child Benefit arrangements.

Employment and Support Allowance (ESA)

If you’re unable to work because of an illness or disability, you may be able to claim Employment and Support Allowance (ESA).

This benefit depends on a number of factors, including age and income circumstances – the Citizens Advice Website lists everything you need to do on its ESA overview page, and you can also get clear guidance from your local Citizens Advice Bureau. You should also note that you may be required to undergo a Work Capability Assessment in order to claim ESA.

Pension Credit

Last but not least in our guide to self-employed tax benefits, if you’re above State Pension age you may be eligible for Pension Credit. Whether you’re a long way off or just round the corner from State Pension age, put it on your radar – it’s an important one for the self-employed.

Pension Credit is currently chopped into two parts – Guarantee Credit and Savings Credit. The first one tops up your weekly income if it’s below a certain threshold, whilst the extra Savings Credit is a payment for people who’ve saved some money towards their retirement.

That’s the current guidance, but it’s important to note that if you reached State Pension age on or after 6 April 2016, you probably won’t be eligible for the Savings Credit. Check what applies to you on the government’s Pension Credit overview.

Planning for retirement? You should also check out our guide to setting up your own self-employed pension.

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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