We need to see your last years trading accounts for all businesses you have and a completed self-employed earnings form.
If you don’t have accounts then you need to keep an accurate record of your business income and expenses and complete a self-employed earning form.
A new business
You need to complete a self-employed earnings form giving details of what you expect the income and expenses to be for the first three months of trading.
If you are thinking of going self-employed you can access more advice and information from Directgov: Self-employment Opens in a new window.9830
How are self-employed earnings calculated?
We need to work out your gross average weekly income from your business. We do not allow some expenses and we will add back in any personal drawings you take from the business.
If you are a self-employed childminder, we will work out your gross self-employed earnings using one-third of your gross income.
Changes to your business
You must tell us about changes which will have an effect on the income of your business. Things like:
- A change from full-time to part-time
- The loss of a major customer
- Your business is affected by seasonal work
Minimum set income after one year of self-employment
If you are self-employed and your business has been running twelve months or more we will calculate a minimum set income (Minimum Income Floor).
It is calculated using the National Minimum Wage Opens in a new window for your age group, multiplied by 35 hours. It also includes a notional deduction for tax and national insurance and half a private pension contribution, where a pension contribution is being made.
What earnings we use when working out your entitlement
We use the gross amount you earn and take off what you pay for tax and National insurance, and 50 percent of any pension you pay.
If we have calculated a minimum set income (Minimum Income Floor) and this is higher than your self-employed earnings we will use this as your gross earnings when working out your entitlement.
We can also take off a set amount from your earnings every week:
- £5 if you are single
- £10 if you are a couple
- £20 if you are disabled or a carer
- £25 if you are a single parent