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Being self employed

Working for yourself can be a good way to get back to work after having children – and to arrange your working hours around your children. The flexibility this brings can be very useful, but there are things to consider if you’re thinking about becoming self-employed. Things like the admin (and discipline!) this involves, how to register your business with HMRC, and making sure tax and National Insurance are in hand. 

This page shares some of the most important things to think about to successfully combine working for yourself and raising your children.

Is being self-employed right for you?

Advice for starting your own business

Registering as self-employed

Claiming benefits while working for yourself

Natasha’s story

Is being self-employed right for you?

One of the perks of working for yourself is being able to set your own hours and work flexibly around your childcare commitments. And doing something you feel passionate about can be very rewarding. You can also adjust the amount you’re working and the size of your business. You may want to start small and then scale up as your children get older, for example.

As with any type of work, there are downsides to being self-employed. You’ll have to manage a variable and likely unpredictable income. You’ll have to make sure your paperwork and taxes are in hand. You won’t get the benefits of employment like paid holidays, maternity leave or a workplace pension scheme. And working for yourself takes discipline and self-motivation. You may end up working long hours or at weekends. 

You can also ease yourself in by being employed and self-employed at the same time. If you want to try out a new business and are working, you could ask about flexible or reduced hours. This will allow you to see how the business goes before giving up your job.

Advice for starting your own business

There are lots of things to consider when starting up a business. But there’s also plenty of advice and support out there. Here are our top links:

  1. There’s tons of information on gov.uk about working for yourself, including how to set up a business. You can also get free expert support through the government’s Business Support Helpline
  2. You’ll find lots of useful guidance in this step-by-step guide to starting a business, plus more information and ideas for small businesses on smallbusiness.co.uk.
  3. The tax office (HMRC) has lots of free email updates, videos and webinars explaining how to run a business and to give you the confidence to get started.
  4. If you need funding for your business, gov.uk also has a free search tool that lists grants, loans and other sources of financial support.
  5. You might be able to apply for a government-backed Start Up Loan to start or grow your business. You’ll also get free support to write a business plan and free mentoring.

If you’re unemployed or claiming benefits, your work coach can give you help on how to start or develop your business.

Registering as self-employed

Once your business is up and running, you’ll need to register as self-employed with HMRC. For most people, this means setting up as a sole trader. This is a class of business – another option would be setting up a limited company.

If you’re self-employed, you’re responsible for your tax and National Insurance contributions. There’s lots of helpful information available from HMRC about filing taxes – including short videos about self-assessment and one on completing your first self-employed tax return. They also have an online calculator to help you budget for your tax and National Insurance. Another option, if you can afford it, is to hire an accountant to handle all of this for you.

Claiming benefits while working for yourself

If you’ve been getting benefits, you’ll need to let the relevant office know that you’re working for yourself. This might mean some benefits come to an end (like Jobseeker’s Allowance), but others might continue. 

If you’re claiming tax credits, let the tax credits helpline know that you’re self-employed and if you want to claim for childcare costs. You need to do this within a month of starting. It’s best to do it as soon as you can because you could be entitled to more money than before. Our page on tax credits has more.

Some benefits will stop once you start work, work more hours or earn more money. This might affect the amount of Housing Benefit, Council Tax Reduction or Support with Mortgage Interest you get, or whether you get them at all. Your council might give you an extra 4 weeks extended payment of all of them at your current rate. You don’t have to claim for this – your council will decide and let you know.

Universal Credit

You may be able to get Universal Credit while working for yourself, depending on how much you earn.

Your Universal Credit each month is based on the amount the government expects you to earn – called the minimum income floor. This is usually what someone would earn if they worked at the National Living/Minimum Wage for your age group for the number of hours you’re expected to work or look for work. 

If you earn more than this, your Universal Credit will be based on your actual earnings. If you earn less, your Universal Credit will be calculated as if you’d earned the minimum amount.

This minimum income floor doesn’t apply to everyone. If your children are very young or disabled, or you’ve recently started caring for another child, it may not apply to you. If you’re unsure, speak to your work coach. See our page on work-related expectations for Universal Credit for more.

You’ll be exempt from the minimum income floor for a year from the date you’re assessed as being gainfully self-employed. This means being self-employed is your main job, you have steady work and expect to make a profit. During this year, you won’t have to look for any other paid work. You’ll have to go to an interview every 3 months and show you’re doing all you can to increase your income. 

Natasha’s story

Hear Natasha talk about being self employed as a single mum to 3 boys. She shared with us how self-employment has allowed her to do what she loves while working flexibly around her family.

Date last updated: 22 April 2024

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