Self-employment: Gainful self-employment

A claimant is in gainful self-employment if the Secretary of State has determined that -

Whether a claimant is in gainful self-employment for UC purposes is important because it may have an impact on the claimant’s work-related requirements and it also determines whether:

  1. minimum income floor applies to the claimant’s S/E earnings
  2. the claimant is eligible for a start-up period (see below).

The claimant will be asked to provide evidence of their self-employed activities usually at a ‘Gateway’ interview shortly after the UC claim has been made. Note that during the coronavirus pandemic, face to face interviews are suspended.

DWP guidance suggests that the following factors are relevant to the gainful self-employment test:

  1. Whether the activity is undertaken for financial gain
  2. The number of hours spent each week on the work
  3. Any business plan or steps taken to increase income from the activity
  4. How HMRC regard the activity
  5. How much work is in the pipeline
  6. Whether the claimant is actively marketing or advertising for work

There is some recognition in the guidance for new businesses and decision makers are told to consider:

For businesses receiving little or no income, the guidance states the following should be considered to determine if the claimant is still gainfully self-employed (if they are then the MIF will apply if they are outside of their start-up period and in the all work requirements group):

The guidance directs decision makers to consider periods of sickness that are minor and temporary as part of the normal pattern of self-employment which means the person will still be classed as gainfully self-employed.

ADM Chapter H4020 provides more information about how DWP will determine whether someone is in gainful self-employment. Appendix 2 has further examples of the gainful self-employed test.

Last reviewed/updated 25 May 2022