Self-employment: What counts as self-employment for UC?

For UC purposes, earned income includes the remuneration or profit derived from a trade, profession or vocation. This remuneration or profit will be treated as self-employed earnings for UC.

According to the DWP ADM (Chapter H4), the concept of ‘trade, profession or vocation’ is taken from tax law. A person will either be a sole-trader or in a partnership with other(s).

The ADM includes a list of items that should be taken into account when determining if a person is engaged in a trade. No one point is exhaustive. In some circumstances the existence of one point may be enough in others it will be a combination of factors. We have reproduced the factors to be considered below. Paragraph H4013 contains useful examples of how the criteria will be applied:

  1. whether there is a profit seeking motive (Regardless of whether or not a profit is actually made)
  2. the frequency and number of similar transactions. The more frequently that a transaction is carried out, the more likely that this is trading
  3. whether assets are modified in order to make them more attractive for a person to buy. If this is the case then this is likely to point towards a trade.
  4. the nature of the asset – was the asset bought simply to sell on for a profit?
  5. whether there is a connection with an existing trade. If a person sells something unconnected with what they normally do by way of work then this may point towards a person not trading
  6. financial arrangements. Where an asset is bought with a short-term loan which is to be funded by selling the asset again then this points towards trading
  7. the length of ownership. The longer than an asset is owned, the more unlikely that the sale of it constitutes trading.
  8. the reason for the acquisition and sale.

Guidance on what constitutes a profession and vocation is less detailed. Examples of a profession include accountancy, the law and consultancy. Examples of a vocation given in the ADM include sport, music and acting.

The profession and vocation must be carried out in a capacity other than an employed earner.

Updated 7 March 2016