| Can I claim if I have just started my own business?
Yes, we will ask you to provide details of your estimated earnings and make an award of Benefit for a short period. At the end of this period we will expect you to provide actual figures to allow us to calculate the net profit. This will help us to pay your Benefit sooner rather than having to wait until you have been trading for a few months.
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How we will calculate your self-employed earnings?
We will base this on the net profit of the business over a specified trading period. This will reflect the flow of cash into and out of the business.
Will business expenses be taken into account in deciding net profit?
Yes, some expenses can be allowed, the main ones are:
- loan interest
- VAT paid
- proven bad debts.
However, some business expenses are not allowable, these include:
- depreciation
- drawings
- business entertainment
- business trips or promotional events
- some capital repayments
Will allowances be made for Tax and National Insurance?
Yes, if the net profit from the business is high enough we will allow any tax or National Insurance contributions you are due to pay. If you make any qualifying pension contributions we will also allow half of these.
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What proof will we require?
In order to verify your self-employed earnings we will ask to see your latest accounts. If you have been in business for less than a year or your gross profit is small we will not insist on certified accounts. We may however, ask for sufficient, alternative, information to allow us to calculate your self-employed earnings.
Alternatively, we may ask you to complete a special self employed supplement form giving details of the income and outgoings from the business. We will include this form with your benefit application form (pdf, 519K, 20 pages). Please download the relevant guidance notes (pdf, 175K, 36 pages) for using this form.
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Would a recent tax assessment be sufficient proof of income?
No, Housing & Council Tax Benefit rules are different from tax rules so it would not be acceptable. Similarly we cannot base your income on the amount used in a Working Families Tax Credit assessment.
Additional Information
Self-Employed Childminders
Childminders are treated differently. Instead of working out what their actual expenses are, two thirds of their total income is disregarded. The remaining third becomes their 'business income' for Benefit purposes.
Business Partnerships
If you are employed in a partnership, the pre-tax profit for the business (i.e. gross income, expenses) is divided equally between the number of partners. If there is a formal agreement in the partnership which governs that profit should be treated differently, then this will take priority.
There are documents on this page available in Portable Document Format (PDF) and you can view these with Adobe Acrobat Reader. The Reader can be downloaded for free from the Adobe web site.
After you have viewed the information required we would be grateful if you could take a few minutes to complete our short survey, please click here to enter survey.