Benefits for the self-employed
Summary
Self-employed people are those workers who are not employed under a contract (e.g. window cleaners, certain taxi drivers, painters & decorators or gardeners etc.), and there is specific information we need when self-employed people claim benefit. You can be self-employed as a sole trader or as part of a business partnership.
Further information
Evidence of self-employed income
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 a ‘profit and loss’ account and balance sheet for your most recent trading year. We may also ask for the most recent tax assessment form from Her Majesty’s Revenue and Customs (formerly the Inland Revenue).
What is the 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 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 for expenses such as depreciation, business entertaining, capital repayments on loans or any sum that relates purely or partially to a private expense.
Self-employed Childminders
Two-thirds of childminders total income is disregarded. The remaining one third becomes the ‘business income’ for benefit purposes.
Business Partnerships
The pre-tax profit for the business is divided equally between the number of partners. If there is a formal agreement in the partnership which governs that any profit should be treated differently, this will be taken into account when dividing the pre-tax profit.
Income tax and National Insurance
We will calculate ‘notional’ income tax and national insurance deductions ourselves based upon the net profit figure. These figures may differ from the figures worked out by Her Majesty’s Revenue and Customs.
Half of any private pensions contributions are also disregarded.
These figures are then deducted from the net profit to give us an earnings amount to be used in the housing and council tax benefit calculation.
Drawings from the business
There will be certain cases where the ‘drawings’ from the business will be used in the benefit calculation, rather than the net profit figure. This will be in circumstances where the drawings give a more accurate view of the individual’s income from the business.
Want to get an idea of how much benefit you are entitled to? Answer the questions in our online benefits calculator to get an estimate. Or, make a benefit claim now.
Related pages on this website
Contact us
| contact officer/team: | Benefits Team |
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| web: | online enquiry form |
| email: | Benefitsmailbox@s-norfolk.gov.uk |
| freephone: | 0808 178 7143 |
| telephone: | 01508 533633 |
| minicom/textphone: | 01508 533622 |
| address: | South Norfolk Council South Norfolk House Swan Lane Long Stratton Norwich NR15 2XE |
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