Benefit claims for self-employed people

If you are self-employed and wish to claim Housing Benefit and/or a Council Tax Reduction, we need to decide whether you are eligible for benefit. 

We do this by looking at your total net weekly income from your self-employed earnings and any other income or capital you may have.

Assessing self-employed income

First we have to work out the net profit from the total income.

The net profit is calculated as follows: Gross income less any allowable business expenses = pre-tax profit.

From this figure we deduct the amount you would expect to pay in tax and national insurance, and half of any pension contributions. This gives us a net profit figure. This may not be the same as the figure from HM Revenue and Customs.

Couples who are business partners

We follow the same guidelines if the business partners are a couple. This ensures that we calculate the deductions for tax and national insurance correctly.

Allowable business expenses

These are expenses we consider reasonable and are incurred wholly for running the business.

Examples of allowable expenses include:

  • Rent/ Water rates on business premises;
  • Gas, electricity and other fuel costs on business premises.
  • Telephone charges;
  • Advertising;
  • Postage and stationary;
  • Legal and accountancy fees;
  • Buying stock and supplies;
  • Business-only motor expenses.

Expenses like these will be deducted from the gross income figures.

There are certain expenses HM Revenues and Customs allow that we cannot allow, such as:

  • Depreciation;
  • Capital expenditure;
  • Business entertainment.

People trading as child-minders

If you are trading as a child-minder, you are not treated the same. When calculating the net profit for self-employed child minders we do not deduct business expenses.

We arrive at the net profit by deducting tax, national insurance contributions and half of any pension contributions from one third of the gross income.

Information you will have to provide

Depending on your circumstances; the main application form, Review Form or Change of Circumstances Form.

You will also need to fill in a Self-employed Form detailing the business income and expenditure. We need evidence of:

  • Your business income and expenditure;
  • All other income and savings;
  • Your most recent accounts;
  • A completed self-employed earnings form. You can download this form below but please read the guidance notes before completing the form:

Self-employed Guidance Notes
Self-employed Earnings Form

  • We will also need evidence of income and expenditure, for example receipts.

Prepared accounts or a spreadsheet showing your income and expenditure are acceptable alternatives, provided they clearly show the information we need. Please note that unless they are organised, we may not be able to process your application.

If you have only just started your business, you will need to estimate your initial income and expenditure figures.

If we use an estimated figure to assess your claim we will write to you again soon for actual income and expenditure figures.