Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. The only exception is for certain people who are granted refugee status. Instead, people are expected to claim UC or pension credit depending on their circumstances.  Currently, existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our existing tax credit claimants page for more information. Our understanding is that the majority of existing tax credit claimants will move to either universal credit or pension credit by the end of the 2024/25 tax year. You can find out more about this in our universal credit section. 

Updated on 6 April 2024

Self-employment and universal credit

This part of the website explains how universal credit works if you are self-employed.

Part of an official form showing section 2 'SELF-EMPLOYMENT'.
ShaunWilkinson / Shutterstock.com

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Universal Credit has some particular rules if you are self-employed, such as applying a deemed amount of earnings known as the minimum income floor in some cases. In addition, the way earned income from self-employment is worked out is not the same as it is for income tax purposes or for tax credit purposes.

Where you say you are self-employed, DWP then need to consider whether the income from your activity counts as self-employed earnings for universal credit and also whether the activity is gainful self-employment for you.

Income from self-employment is taken into account as earned income when DWP calculate your universal credit award, regardless of whether they decide you are in gainful self-employment or not.

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