Self-employed Income

What is a Self-employed Income?

A person is self-employed if they own their own business and they only work for themselves. They do not receive a regular wage or salary from an employer and are not employed under a contract. A self-employed person could be a sole trader or in a partnership. This can include jobs like window cleaners, taxi drivers, painters and decorators, hairdressers, shared fisherman. 

If you receive a wage from an employer and Income Tax or National Insurance payments are taken from your wages - you are not self-employed.

My business has been affected by coronavirus

Coronavirus (COVID-19) may have affected your business. You may then be eligible for help under the Self-employment Income Support scheme. 

  • For more help and support please go to Gov.uk

I am a director of a company

A Director of a Limited Company handles managing the day-to-day business activities and finances of the business. They may be entitled to receive a wage for this role. If you receive such an income, you are not treated as being self-employed. 

You do not need to complete a Self-employed Income form. But, you must tell us that you are a Director and provide us with evidence of your income from these earnings. To do this you must provide:

  • your last five weekly, three fortnightly or two monthly payslips; or
  • a Certificate of Earnings signed by your employer

What information will I have to provide?

If you are self-employed you must complete a Self-employed Income form.

You can complete this online at: 
 

Self-employed income form

 

You must complete the form to cover a full 12 month period.

If your business has traded for less than 12 months, you can include:

  • a combination of actual and estimated income.

If your business has traded for more than 12 months, you must include:

  • the previous 12 months actual income.

No, but you must keep an accurate record of the income and expenditure of the business. We may ask you to provide evidence of income and expenses at any time.

If you do use an accountant, we may ask you at any time for a copy of your most recent certified accounts. 

We cannot accept your tax return as proof of your self-employed income. This is because we treat your income differently when we calculate Housing Benefit.

We do not allow some expenses that are taken into account for tax purposes.

If you are VAT registered please supply copies of all 3 monthly HMRC returns that you have submitted.

These should relate to the dates of your 12 month self-employed income and expenditure declaration.

If you are self-employed, we use your average weekly net profit -from your self-employed income - to calculate your entitlement to Housing Benefit.

To do this we:

  • start with your gross income – this is the amount you earn for services/sales you provide before any expenses are taken out
  • subtract allowable expenses 
  • subtract amounts for Tax and National Insurance 
  • subtract half of any amount you pay towards a private pension

The remaining figure is your net profit that we convert into a weekly amount.

If you have more than one business, you must:

You still need to make a declaration for a 12 month period. In this situation, you need to tell us your Actual and Estimated income and expenditures.

We may assess your entitlement to Housing Benefit for a short period and then review it. This will depend on how long you have been in business. We will contact you if we need further information.

The online Self-employed Income form explains this in more detail.

If you have been trading for 12 months or more you will be able to provide your actual income and expenses. You can enter these details on the online Self-employed Income form.

The online Self-employed Income form explains this in more detail.

We can allow expenses for business purposes only. For example:

  • Staff costs

  • Rent/rates for business premises

  • Stock and supplies

  • Advertising

  • Legal/accountancy fees (proof required)

  • Bank charges

  • Interest on business loans

  • Transport costs

  • Telephone costs for business purposes

We are not able to deduct the following expenses:

  • any costs relating to personal use

  • any withdrawals you pay to yourself such as bonuses, dividends or such payments

  • costs for setting up/expanding the business

  • depreciation

  • entertainment costs

  • capital repayments on a business loan

We can only consider your expenses you use solely for your business. You will need to look at each of your expenses and work out:

  • what percentage you use for your business

  • what percentage you use for personal use

In the Self-employed Income form you must input the total amount spent on each expense item. You should then give the percentage for business use.

We may ask you to provide evidence of income/expenses for the ‘assessment’ period.

Evidence may include:

  • business bank statements

  • receipts

We will contact you with details of the evidence we need.

The information in this section is for general advice only. Contact your local Housing Benefit office if you have any queries.

 


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Housing Benefit online forms
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