Working on UC
Guide

Self-employment and the minimum income floor

If you're self-employed and your start-up period has ended, Universal Credit can treat you as earning a set amount even when you earn less. For someone aged 21 or over expected to work 35 hours a week, that's about £1,681 a month in 2026 to 2027.

Last checked November 2026.

When it applies

The floor only applies if all three of these are true:

  1. DWP has decided you're in gainful self-employment. Broadly, that means self-employment is your main job, it's organised and regular, and you expect to make a profit. DWP usually decides this at a gateway interview.
  2. You're in the "all work-related requirements" group, meaning DWP expects you to look for or increase work in full.
  3. You're not in a start-up period.

Who it doesn't apply to

Because the floor only applies to the "all work-related requirements" group, it doesn't apply if you're in another group. That includes people with limited capability for work, with or without work-related activity, people caring for a disabled person for 35 hours or more a week, and the main carer of a child under 3.

If DWP expects you to work fewer hours, for example because you care for a school-age child, your floor is lower.

The start-up period

  • It lasts up to 12 months.
  • It starts at the beginning of the assessment period (the monthly period your UC covers) in which DWP decides you're gainfully self-employed and taking steps to raise your earnings.
  • DWP can end it early if you stop being gainfully self-employed or stop trying to increase your earnings.
  • During it, UC uses your actual earnings.

How the floor is worked out

35 hours a week at the £12.71 National Living Wage, from April 2026
£12.71 × 35 hours£444.85 a week
× 52 ÷ 12£1,927.68 a month
Minus notional income tax and National Insuranceabout £246
Your minimum income floorabout £1,681

If your self-employed earnings for the month are below the floor, UC uses the floor instead. If you also have a job, your pay counts towards it: UC compares all your earnings with the floor.

For a couple, each partner's threshold is added together. The floor can be reduced or removed if your combined earnings are high enough.

Pension payments and the floor

For the self-employed, pension payments are taken off your profit when UC works out your earnings, just as for employees. But the floor itself isn't reduced by pension payments.

  • If your earnings after the payment are still above the floor, the payment works as normal.
  • If the payment would take you below the floor, UC uses the floor instead. That part of the payment doesn't raise your UC, although it still goes into your pension with tax relief.
  • During your start-up period, the floor doesn't apply, so pension payments work as they do for employees.

The minimum income floor calculator shows how much of a payment would still count.

Losses and good months

  • Losses from earlier months can be carried forward and taken off later profits. If that would take your profit below the floor and the floor applies, the loss is effectively wasted.
  • Surplus earnings: if you earn well above the level at which UC stops, the extra can be carried forward into later months. GOV.UK says this applies if you earn £2,500 or more over that level.
Where this information comes from