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Self-employed Claimants

Self-employed people are those workers who are not employed under a contract. Typically, they can include trades such as window cleaners, certain taxi drivers, painters and decorators, gardeners.

A person can be self-employed as a sole trader or as part of a business partnership.

If you are self-employed and you would like to apply for housing benefit and/or council tax reduction, you will need to complete a self-employed earnings form.

Information requirements for self-employed claimants

If you have recently started trading on a self-employed basis, we will ask for an estimate of the likely income and expenses for the business over the first few months of trading. This will help us to pay your benefit sooner rather than having to wait until you have been trading for a few months.

If you have been trading for over 12 months, we will ask for a full year's trading figures – normally in the way of a profit and loss account.

What is your total income for benefit purposes?

You need to provide details of all the income of the business as well as any other money coming into your household. This includes interest from business bank accounts, tips and royalties. We will advise you whether or not this money is counted for benefit purposes.

Which expenses are then taken off this income?

You must provide details of all of your expenses. Only expenses that are 'wholly and exclusively' incurred in relation to the business can be allowed for benefit purposes.

Please note that the rules about expenses allowed for benefit purposes are different to those for income tax purposes.

Tax and National Insurance

After the net profit of the business is worked out we will make an assessment of income tax and National Insurance contributions. These figures may differ from the figures worked out by HM Revenue and Customs.

Private pensions

Please supply proof of any contributions you may make into a personal or private pension. Half of any contribution that you make will not be counted as part of your income for benefit purposes.

Working age self-employed claimants

From 1 April 2017, the rules for working age claimants claiming council tax reduction will change. Self-employed claimants will have a minimum income floor used to calculate their income, if their net self-employed earnings are below £120.00 per week. If their net earnings work out to be more than £120.00 per week, then the actual earnings amount will be used in the council tax reduction side of the calculation. From 1 April 2020 this figure is set at £139.52.

The minimum income floor has been calculated based on the national living wage x16 hours per week (£139.52 from 1 April 2020). The minimum income floor will only apply to working age claimants and it will only apply to the council tax reduction side of the claim. The minimum income floor will apply to all working age self-employed claimants or their partners regardless of the number of hours they actually work.

There is a 12 month grace period for any new self-employed business. Any new business will have their actual self-employed earnings used to calculate their council tax reduction claim. The minimum income floor will not apply until 12 months after the new business was started.

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