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If you have recently established a new business or you plan to do so in the near future, you may be wondering if you are eligible for financial support until you start to earn enough money to live on. In this article, we will explain what benefits you may be able to claim as a business owner in the UK.

Can I get personal financial support as a business owner?

There is a common perception among many new business people that starting a new venture means that they are no longer eligible for personal financial support. Thankfully, many business owners who need personal financial support can claim benefits and statutory allowances. The eligibility criteria differ for each benefit type, hence, it is always advisable to explore all of the options available even if you think that you may not be eligible. 

Broadly speaking, the personal financial help available to business owners in the UK falls into two categories: government benefits and statutory allowances.

What benefits can a business owner in the UK claim?

As a business owner in the UK, depending on your personal and financial circumstances, you may be eligible for:

  • Child benefit
  • Universal Credit
  • Job seeker’s allowance (JSA)
  • Statutory maternity pay

This list is by no means exhaustive, and there may be other benefits available to you depending on your situation and geographical location. In the following sections, we will look at who can apply for each type of benefit, how much it may be worth to you and the eligibility criteria.

Child benefit

Many business owners are surprised to realise that even though they are making a good living from their venture, they are still eligible for child benefit.

Am I eligible?

You may be eligible for Child Benefit if you are responsible for bringing up a child who is either under 16 or under 20 and in education or training. It is important to bear in mind that both parents cannot claim child benefit; only one person can claim.

The rules state that you are classed as being responsible for your child if you live with them or you pay at least the same amount as Child Benefit (or the equivalent in kind) towards their upbringing (e.g. food and clothing). 

If you earn less than £50,000 in personal income, you will receive the full amount of child allowance. This means that if you and your partner individually earn under £50,000, you can still claim child benefit. If one of you earns more than this amount, you will still be eligible, but you will receive less (this is done by charging you a “child benefit tax charge”). If one of you has a personal income before tax of £60,000, the amount you earn in child benefit will be effectively cancelled out by the amount of extra tax you would need to pay. 

How much does it pay?

Child benefit is paid at the rate of £24 per week for the eldest or only child plus £15.90 per week for any additional children. The payment is made monthly directly to your bank account.

Tax-free Childcare 

One of the often overlooked benefits of running a business is the ability to claim tax-free childcare. Tax-free childcare can be used to cover the cost of approved childminders, nurseries, nannies, after-school clubs and play schemes.

Am I eligible?

You will be eligible for tax-free childcare if you are employed, self-employed, or a director of a company and you have a child who usually lives with you who is age 11 or under. In addition, you must be paid at least the national minimum wage. This means that you and your partner (if applicable) must each expect to earn at least the following amounts in the next three months:

  • £2,167 if you’re aged 23 or over
  • £2,117 if you’re aged 21 or 22
  • £1,557 if you’re aged 18 to 20
  • £1,098 if you’re under 18 or an apprentice

These amounts are worked out on the basis of the applicable National Minimum Wage or Living Wages for each age category and a 16 hours a working week.

If you have come to live in the UK from another country, you must have a national insurance number and be able to prove that you have British or Irish citizenship, have settled or pre-settled status under the EU Settlement Scheme (EUSS) (or you have applied and are waiting for a decision under the EUSS), or have permission to access public funds.

How much does it pay?

Tax-free childcare is worth up to £500 every 3 months for each eligible child with an approved childcare provider. If your child has a disability, you may be eligible to receive up to £1,000 every 3 months (i.e. £4,000 a year).

The way that the scheme works is that for every £8 you pay into an online tax-free childcare account, the government will pay in £2, which you can use to pay the approved childcare provider. The approved childcare provider must be registered for the tax-free childcare scheme.

Universal Credit

As a business owner, you may be eligible for Universal Credit while in the startup phase of your new venture if you have a low income. Universal Credit was introduced in 2013 to replace a number of older benefit types, including Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), and Working Tax Credit. If you are eligible, you will be paid a fixed monthly amount to cover your day-to-day living costs.

Am I eligible?

You may be eligible for Universal Credit as a business owner if you live in the UK, are aged 18 or over and under the State Pension age of 66, and have £16,000 or less in money, savings and investments. The government provides an online benefits calculator to check how much you may be entitled to. Even if you are on a low income but believe that you may not be eligible, it is still advisable to apply as each application is decided on a case-by-case basis.

How much does it pay?

  • If you are single and under 25: £292.11 per month
  • If you are single and 25 or over: £368.74 per month
  • If you live with your partner and you are both under 25: £458.51 per month
  • If you live with your partner and either of you is 25 or over: £578.82 per month

Statutory maternity leave and pay

As a business owner, you will still be eligible for statutory maternity leave for 52 weeks. This is made up of 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave. The rules state that you are not required to take 52 weeks, but you must take 2 weeks of leave after your baby is born. The earliest that you can start your maternity leave is 11 weeks before your due date. In terms of maternity pay, Statutory Maternity Pay (SMP) is paid for up to 39 weeks from when you take maternity leave. This amount is paid by the business but claimed back from HMRC.

Who is eligible?

To receive statutory leave, you must meet the following eligibility criteria:

  • Have average weekly earnings of at least £123
  • Have given the required maternity leave notice of at least 15 weeks before your due date, and
  • Have been employed by your company for at least 26 consecutive weeks before the “qualifying week”. The qualifying week is the 15th week before the week of the due date.

How much does it pay?

If you are eligible for statutory maternity pay, you will receive 90% of your average weekly earnings before tax for the first 6 weeks and then £172.48 or 90% of your average weekly earnings (whichever is the lower amount) for the following 33 weeks.

What if I am not eligible for statutory maternity pay?

If you are not eligible for SMP, you may qualify for a maternity allowance. You can claim for maternity allowance if you have been pregnant for 26 weeks, and the payments will be made to you from 11 weeks before your due date. Under this scheme, you will receive between £27 to £172.48 a week for up to 39 weeks if self-employed. If you are employed, you will receive up to £172.48 a week or 90% of your average weekly earnings (the lower amount) for up to 39 weeks.

Final words

The benefits and allowances discussed above only cover some of the forms of financial support available to you if you run your own business or company. Other potential schemes include Bereavement Support payments, Disability Living Allowance (DLA) for children, and Council Tax reduction. The possibility of a Council Tax reduction will depend on the criteria of your local authority and your level of income. If eligible, you may receive a discount of up to 100% on your council tax payments. Remember, many business owners need financial help in the early days of their venture. If you need help, don’t be afraid to ask. There may be other schemes available that you are not aware of. In addition, if you are struggling to pay your bills, speak to your service providers to discuss temporary help and forbearance measures while you get your business “on its feet”.

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