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Contact the Money Matters team using the online enquiry form
Self-Employed - A Definition
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, etc.
A person can be self-employed as a sole trader or as part of a business partnership.
Information Requirements For Self-Employed Customers
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 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 years trading figures – normally in the way of a "profit & loss account". We will ask you for your unique tax reference number. We may also ask for the most recent tax assessment form received from the Inland Revenue.
What is my Total Income for Benefit Purposes?
The starting point in the calculation is to work out the total business income for the period in question. This will include all money coming in, business start-up allowances, etc but will not include sums of capital paid into the business.
Which Expenses are then taken off this Income?
The Benefit rules are similar to the rules operated for tax purposes. Notable differences are that we cannot deduct any sums attributed to expenses such as depreciation, business entertaining, capital repayments on loans or any sum which relates purely or partially to a private expense.
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.
Tax & National Insurance
We will calculate income tax and National Insurance deductions ourselves based on the net profit figure. These figures may differ from the figures worked out by the Inland Revenue. Half of any private pension contributions are also disregarded.
All of the above are then deducted from your net profit figure to give us the earnings amount to be used when calculating Housing & Council Tax Benefit.
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