Key points
- Tax credits ended on 5 April 2025. Income Support and income-based JSA closed on 31 March 2026. Income-related ESA and working-age Housing Benefit were abolished from 1 July 2026, with some exceptions.
- A new self-employed claimant may get a start-up period of up to 12 months, when Universal Credit uses actual earnings.
- After that, the Minimum Income Floor applies if you are gainfully self-employed. In a low month, Universal Credit assumes you earned the floor.
- You report income and expenses every month, even with no income. This is separate from your Self Assessment tax return.
Have legacy benefits and tax credits ended?
This page was reviewed on 9 October 2026. Kairos-K is an accountancy practice and does not advise on benefit entitlement. For advice on your own claim, use the free services in Where to get free, independent help.
Yes, for nearly everyone of working age.
| Benefit | Position now |
|---|---|
| Child Tax Credit and Working Tax Credit | Ended on 5 April 2025. HMRC finalised the last awards with an Annual Review letter. |
| Income Support and income-based Jobseeker's Allowance | Closed on 31 March 2026. |
| Income-related Employment and Support Allowance (ESA) | Abolished from 1 July 2026. It continues for now for some people with an appointee. DWP will set a final date for them later. |
| Working-age Housing Benefit | Abolished from 1 July 2026. It continues for people in temporary or supported accommodation. |
| Housing Benefit over Pension Credit age | Continues. |
| "New style" (contribution-based) JSA and ESA | Not legacy benefits. They continue and can be paid alongside Universal Credit. |
An appointee is someone who manages the claim for another person.
If you still get a Migration Notice
A small number of people, mainly ESA claimants with an appointee, may still receive a Migration Notice. If you do:
- The deadline in the letter will be at least three months after the date it was issued.
- You can ask for more time if you have a good reason, but you must ask before the deadline.
- If you miss the deadline, your old benefits stop. You still have until the "final deadline", about one month later, to claim and be treated as if you had claimed on time.
- Transitional protection. If you claim on time and your Universal Credit would be lower than your old benefits, you may get an extra "transitional element" to make up the difference. It reduces as other parts of your award go up and can stop if your circumstances change.
- Savings over £16,000. Normally you cannot get Universal Credit with capital over £16,000. People moved from tax credits with more than £16,000 could have the excess ignored for up to 12 monthly assessment periods. This rule applied only to tax credit claimants.
If you claim Universal Credit without a Migration Notice while on a legacy benefit, your old benefit stops and you cannot go back. You also do not get transitional protection. Before you claim, use a free benefits calculator or get free independent advice, for example from Citizens Advice, to check whether you would be better off.
Claiming Universal Credit when you are self-employed
- Claim online at GOV.UKYou prove your identity with documents such as a passport, driving licence, bank card or payslip. If you cannot do this online, you are given a jobcentre or phone appointment.
- Tell DWP about your self-employmentThis covers sole traders, partners, contractors and subcontractors, and gig-economy workers. It can also cover a limited company you own or significantly control.
- Go to the self-employed interviewA work coach decides whether you are "gainfully self-employed": self-employment is your main job, and your work is organised, developed and regular, with an expectation of profit. Take your business records and evidence of your trading.
If you are gainfully self-employed, you do not have to look for other work.
The start-up period
If you are gainfully self-employed and have not been gainfully self-employed while on Universal Credit before, you may get a start-up period of up to 12 months. During this time:
- Universal Credit is worked out on your actual monthly earnings, and the Minimum Income Floor does not apply
- you do not have to look for, or be available for, other work
- you meet your work coach every few months to show the active steps you are taking to grow your earnings
If you miss these meetings, the start-up period can end early. You normally get only one start-up period. You can get another only if more than five years have passed since the last one.
The Minimum Income Floor
Once any start-up period has ended, the Minimum Income Floor applies if you are gainfully self-employed. It is an assumed level of earnings: what an employed person in your situation would earn at the National Minimum Wage or National Living Wage for your "expected hours", minus a notional amount for tax and National Insurance.
Expected hours are usually 35 a week. They can be lower if you have caring responsibilities or a health condition. The National Living Wage for people aged 21 and over has been £12.71 an hour since 1 April 2026.
A month above the floor
- DWP uses your actual earnings.
- Your award is worked out as normal.
A month below the floor
- DWP uses the Minimum Income Floor instead.
- You get less Universal Credit than your actual earnings would give.
Each month DWP uses whichever figure is higher. Where both partners in a couple are gainfully self-employed, each has their own floor.
Reporting your income every month
Universal Credit works in monthly assessment periods. At the end of each one, you report your self-employed income and expenses through the "Report your income and expenses" task in your online account. You must report every month, even if you had no income.
- Money your business actually received
- Allowable business expenses you actually paid
- Income Tax and National Insurance paid to HMRC
- Pension contributions you paid
You do not report business assets, such as equipment or money held in a company bank account.
Your profit for the month is treated like earnings. If you have a work allowance, it is £427 or £710 a month, depending on whether Universal Credit helps with your housing costs. Above that, the 55% taper applies: your award goes down by 55p for each £1 you earn.
Keep accurate records and report on time. A late report can delay or stop your payment.
Surplus earnings and losses
- Losses are carried forward and set against profits in later months. This can increase your Universal Credit in those months.
- Surplus earnings. If one month's earnings are high enough to end your award and go £2,500 or more above that cut-off, the excess over £2,500 is carried into the next assessment period if you claim again. DWP has kept the £2,500 threshold until 31 March 2027. It has not dropped to the £300 the regulations otherwise provide for.
How Universal Credit fits with Self Assessment
Universal Credit reporting and your tax return are separate obligations. Doing one does not satisfy the other.
Universal Credit report
- Goes to DWP every month.
- Money actually received and paid in the assessment period.
- Tax and Class 4 National Insurance count in the month you pay them, for example a January or July payment to HMRC.
Self Assessment return
- Goes to HMRC once a year.
- Profit for the tax year, 6 April to 5 April.
- You still register, file the return and tell HMRC about changes to your business.
Your monthly figures will not add up exactly to the profit on your tax return. One set of good monthly records serves both.
Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold falls to over £30,000 from April 2027 and over £20,000 from April 2028. These quarterly updates go to HMRC and are separate from your monthly Universal Credit reports.
Other changes from April 2026
The Universal Credit Act 2025 made two main changes:
- Higher standard allowance. An above-inflation rise. For 2026/27, the allowance for a single person aged 25 or over is £424.90 a month.
- Lower health element for most new claims. From 6 April 2026, most people newly assessed as having limited capability for work and work-related activity get £217.26 a month. The full rate of £429.80 still applies to existing claimants and to people who meet the severe conditions criteria or are nearing the end of life.
Pension Credit and mixed-age couples
If you have reached State Pension age, you usually claim Pension Credit, not Universal Credit. People over State Pension age who were on tax credits were moved to Pension Credit or Universal Credit.
If you live as a couple and only one of you has reached State Pension age (a "mixed-age couple"), you normally claim Universal Credit instead.
Where to get free, independent help
- Citizens Advice Help to Claim gives free, confidential help with Universal Credit claims. England and Wales: citizensadvice.org.uk/helptoclaim. Scotland: cas.org.uk/helptoclaim.
- Northern Ireland has its own Universal Credit system, run by the Department for Communities: see nidirect.gov.uk, and for free independent advice, Advice NI.
- The Universal Credit helpline, run by DWP rather than an independent adviser, is 0800 328 5644 (Welsh: 0800 328 1744). It is open Monday to Friday, 8am to 6pm, and calls are free.
- Free benefits calculators are listed on GOV.UK.
Kairos-K can help with your bookkeeping, monthly income and expense figures, and Self Assessment. We do not advise on benefit claims. See sole trader accounting.
Frequently asked questions
Can I still claim tax credits?
No. Tax credits ended on 5 April 2025. For working-age people the main benefit is now Universal Credit.
Does the Minimum Income Floor apply straight away?
Not during a start-up period of up to 12 months. Your actual earnings are used then.
Do I have to report if I earned nothing this month?
Yes. Self-employed claimants report income and expenses every assessment period, including months with no income.
Is my Universal Credit report the same as my tax return?
No. Universal Credit uses monthly figures for money actually received and paid. Self Assessment covers the tax year. You must do both, and tell HMRC about your business separately.
Can I run a limited company and claim Universal Credit?
Yes. If you own or significantly control the company, DWP may treat you as self-employed, and the same rules can apply, including the Minimum Income Floor.
What to prepare
0 of 5 ready
One piece of advice
Keep your business records month by month, matching your Universal Credit assessment periods. Note money in and money out as it happens and keep every receipt. Then the monthly report is quick, and the same records are ready for your Self Assessment return.
Test yourself
1. When did tax credits end?
Child Tax Credit and Working Tax Credit ended on 5 April 2025.
2. During a start-up period, how is Universal Credit worked out?
The Minimum Income Floor does not apply during a start-up period.
3. You earned nothing this month. Do you still report?
Self-employed claimants report every assessment period, even with no income.
4. Does your monthly Universal Credit report replace your Self Assessment return?
DWP and HMRC are separate. You must do both.
Law and sources
- GOV.UK: Universal Credit and self-employment quick guideGainful self-employment, start-up period, Minimum Income Floor, surplus earnings
- GOV.UK: Self-employment and Universal CreditMonthly reporting
- GOV.UK: How your wages affect your paymentsWork allowance and 55% taper
- GOV.UK: Universal Credit, what you'll getStandard allowance, health element, capital
- GOV.UK: How to claim Universal CreditIdentity checks, helpline, Help to Claim
- GOV.UK: Tax credits have endedEnd of tax credits on 5 April 2025
- UK Parliament: written statement HCWS1524, 20 April 2026Closure of income-related ESA and Housing Benefit
- GOV.UK: Housing Benefit circular A6/2026Closure of working-age Housing Benefit and exceptions
- DWP: Move to Universal Credit statistics to end March 2026Managed migration
- Universal Credit (Transitional Provisions) Regulations 2014, Part 4Migration Notices, deadlines, transitional protection
- Universal Credit Regulations 2013, regulation 62Minimum Income Floor
- Secretary of State determination, January 2026Surplus earnings threshold of £2,500 to 31 March 2027
- Universal Credit Act 2025Changes from April 2026
- GOV.UK: National Living Wage from April 2026£12.71 an hour
- GOV.UK: Pension CreditPension age and mixed-age couples
This guide explains the rules in general terms as at 9 October 2026. It is not advice for your situation. Rules and rates change.
