What is the minimum income floor?

Definition of minimum income floor

The minimum income floor is an assumed level of earnings that the Department for Work and Pensions (DWP) uses to calculate benefit payments for self-employed people who are unable to work and are claiming Universal Credit as a result.

If your earnings are below the minimum income floor, your Universal Credit payment will be calculated using the minimum income floor figure rather than your earnings. If you earn above the minimum income floor, your earnings will be used to calculate your Universal Credit payment.

How is the minimum income floor calculated?

The minimum income floor is calculated by multiplying the level of the National Minimum Wage by the number of hours you would normally work. Take a look at this guide to the minimum income floor for self-employed from Citizens Advice for some examples on how the minimum income floor is calculated.

Start up period for self-employed Universal Credit claimants

The minimum income floor doesn’t apply if you start a business while you’re claiming Universal Credit. In the first year of starting a business your earnings will be used to calculate your payment even if they are lower than the minimum income floor figure.

Find out more about claiming Universal Credit when you’re self employed and unable to work in our guide to sick pay for the self-employed.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

Bookkeeping and tax tips

If you check this box, we’ll send you business tips tailored for landlords. If you’d like more general small business tips, leave it unchecked.

We are committed to keeping your information safe. Read our Privacy Policy to find out more.

Related Definitions

Are you an accountant or bookkeeper?

Find out more about FreeAgent for your practice.