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HMRC internal manual

Tax Credits Manual

HM Revenue & Customs
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Eligibility - remunerative work (general): Self-employed earners (Info)

The qualifying remunerative work condition applies to self-employed earners in the same way as to employed earners.

A self-employed earner’s expectation of payment must be a reasonable one. The customer must confirm that the work is done in expectation of payment. It doesn’t matter that the self-employed earner might trade at a loss.

Hours counted for self-employment

The hours that may be counted as being spent in work by a self-employed earner include

  • those that will be costed to the client as spent in providing the individual order or service
  • those spent in activities necessary to the employment.

Examples are

  • trips to wholesalers and retailers
  • visits to potential clients
  • time spent on advertising or canvassing
  • cleaning the business premises
  • cleaning a vehicle used as part of the business - for example, a taxi or a driving school car
  • bookkeeping
  • research work - for example, where the person is an established author.

Self-employed seasonal workers

Where the person is a self-employed seasonal worker, you must establish whether a recognisable cycle of work exists. If the business continues to operate throughout the year, it will usually be a year.

You should include in the calculations, time spent on all activities connected with the business - for example, taking bookings in winter months, maintenance of property.

You should then average the hours over the cycle excluding the period when no work is done - for example, holidays.

Self-employed new starter

A self-employed new starter is a person who

  • becomes a self-employed earner


  • increased their self-employed hours to 16 or more weekly.

If the person is a self-employed new starter, calculate the hours worked based on the average number of hours the person expects to work in a week.

Allowance paid to assist in running a new business

A person may be in receipt of an allowance payable under certain schemes to assist them to become self-employed. This allowance used to be called a Business Start Up Scheme. This name no longer applies and schemes are likely to have local names.

An allowance paid to assist a person to become self-employed isn’t payment for work, although such an allowance should still be treated as a gross receipt where it’s received.