Out of Work Benefits for the Self Employed

Self-employed people get a pretty raw deal when it comes to out of work benefits.

Despite paying just as much tax as their employee counterparts, the self-employed often find themselves with fewer entitlements when they need the state’s support.

In an increasingly precarious economic environment, this is recognised as a growing problem. There are moves to have self-employed people’s benefit entitlements extended, particularly with regard to Jobseeker’s Allowance. But as the situation currently stands, as a self-employed person you are likely to find yourself with fewer options while you look for work.

Can I claim Jobseeker’s Allowance?

There is a significant loophole in the Jobseeker’s Allowance system. Jobseeker’s Allowance (JSA) is intended to help those who are out of work. It is an intrinsic part of the your National Insurance ‘policy’ – and yet many self-employed people cannot claim it, even if they have made their National Insurance Contributions (NICs).

There are two types of Jobseeker’s Allowance. The first is contribution-based JSA. Eligibility for this payment is contingent on the individual being up to date with their National Insurance Contributions – but self-employed NICs do not count towards this entitlement. So, self-employed people are generally not entitled to contribution-based JSA.

Income-based JSA is no longer available for new claims and has been replaced by Universal Credit. Self-employed people may be able to claim Universal Credit instead, which provides support whether you're in or out of work. Your eligibility and the amount you might receive depends on your circumstances. You can find out whether you are entitled to Universal Credit by using the benefits calculator on GOV.UK.

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What are Working Tax Credits?

It is quite common for self-employed people to cut down the number of hours they work, in order to find a job. While you might need those valuable hours, for example to go to interviews, cutting back on the work you are taking can have a dramatic financial impact.

Working Tax Credits are one way in which you might be able to mitigate that impact. Tax credits are non-taxable payments made by the government to those in certain circumstances. The Working Tax Credit is available to those who are working, but who are on a low income.

In order to qualify for the Working Tax Credit you need to be working for at least 16 hours a week if you have a dependent child, or at least 30 hours a week if you do not. You also need to expect to be working for at least the next four weeks. The amount you receive will depend on a range of circumstances including the total number of hours you are working, the number of children you have, and your age. As with JSA, you can check whether or not you are entitled to Working Tax Credits, and how much you might receive, by using the calculator on the GOV.UK website.

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What about other benefits?

It is important to understand that there are many benefits that are not affected by your self-employed status. Many of these benefits are available to those who are in work too, but they obviously become even more important when you are job hunting.

Of these, Housing Benefit is perhaps the most important. This is a payment made to help with the cost of your rent. You can get this whether you are in work, out of work, or self-employed – provided that your income and savings don’t exceed a certain threshold.

The amount of Housing Benefit you might receive will depend on the size of your property and its location. More information about Housing Benefit is available elsewhere in this section, but you should contact your Local Authority for more information about claiming.

It is important to understand that the rules regarding state benefits for the self-employed are complex – indeed, they can be significantly more complex than those regarding benefits for out-of-work employees. As such, you should consider seeking independent advice to help ensure that you receive what you are entitled to. Free, impartial advice is available from your local Citizens Advice Bureau. Advisors there will be able to tell you what you might be able to claim – and, crucially, how to do it efficiently, in order to make sure that you get the cash as quickly as possible.

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