Benefits - self employed

How is Self Employed income assessed?

When calculating what income should be used, we have to determine the net profit from the proof provided. The Net Profit is calculated as follows:

Gross income less any allowable business expenses = gross profit.

Gross profit less any notional tax, national insurance and half pension contributions = net profit.

What are Allowable Business Expenses?

Only the expenses, which the local authority consider to be reasonable, and are totally for the running of the business be deducted from the gross income figure. These fall roughly in line with those used for Tax purposes.

  • Business Partnerships: If you are self employed in a partnership, the gross profit has to be split between the business partners. To confirm how the business is divided, the Deed of Partnership should be provided.
  • Couples who are Business Partners: The above guidelines will also be taken into account even if the business partners are a couple, because by doing so it ensures that the deductions for notional tax and national insurance are correctly calculated.
  • Child Minders: When calculating what income should be used for self employed child minders, we do not deduct any business expenses. The net profit is obtained by deducting tax, national insurance contributions and half of any pension contributions from one third of their gross profit.

What information will I have to provide?

Please complete a Self Employed Earnings Form (pdf).

We may ask to see evidence of the self assessment. This evidence would be proof of your previous 12 month's trading, profit and loss account(s). This should be available from your accountant. Day books and associated receipts are accepted when the business is new. If you are unable to work for a few days due to bad weather or any other reason unless you were previously on a low income you will probably not get any help as your income will be based upon the previous years accounts or averaged over the previous months.