In the UK, the Minimum Income Floor (MIF) for gainfully self-employed Universal Credit claimants is typically set at 35 hours per week multiplied by the National Minimum Wage for your age group, minus tax and National Insurance. For those aged 21+, this is roughly £427.35 per week ( 12.21 × 35 1 2 . 2 1 × 3 5 hours). The MIF is applied monthly and is used to calculate benefits if your actual earnings are lower.
Generally, you need to file if: Your income is over the filing requirement. You have over $400 in net earnings from self-employment (side jobs or other independent work)
If you earn less than your minimum income floor, the DWP will usually work out your Universal Credit payment as if you'd earned your minimum income floor. If you earn more than your minimum income floor, your Universal Credit payment will be based on your actual earnings.
Minimum income floor (MIF) relates to Local Council Tax Support for people of working age who are self-employed. If you have been self-employed for more than a year, you are subject to a MIF. It is based on the national living wage of £12.21 per week for those aged 25 years or over as of 1 April 2025.
This page explains how the Minimum Income Floor (MIF) works. During the Coronavirus pandemic, the MIF was suspended temporarily for all UC claimants. Legislation has been passed which re-introduces the MIF from 1 August 2021.
If you are single, your MIF is your individual earnings threshold, which in most cases will be the appropriate national minimum/living wage rate for your age multiplied by 35 hours – though the hours may be reduced in some circumstances due to caring responsibilities or health issues.
Yes, if you have net earnings of $400 or more from self-employment, you must file a federal tax return to pay self-employment tax (Social Security and Medicare), even if your total income is less than $5,000. You'd file a return (Form 1040) to report this income and pay the tax via Schedule SE and likely estimated quarterly taxes, but you still need to file if your other income (like W-2 wages) meets other standard IRS filing thresholds (e.g., $14,600 for single filers in 2025).
Are the self-employed entitled to the minimum wage? No. The minimum wage, including the National Minimum Wage and National Living Wage, does not apply to the self-employed. A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
Here are a few mistakes small business owners should avoid:
The federal government charges self-employment tax based on total earnings, not the nature of one's business. As such, income less than $400 net per year may be exempt from self-employment tax. Church income less than $108.28 may also be exempt.
It's based on what an employed person on minimum wage would expect to earn in similar circumstances. If you earn more than this, then your Universal Credit amount is based on your actual earnings. If you earn less, the minimum income floor is used to work out how much you can get.
Minimum income floor is the earnings around used to work out your benefit. This is applied to self-employed people who claim Universal Credit. If you are self-employed and your earnings are low, your benefit may be worked out on higher earnings than you have. This is called the 'minimum income floor'.
If the minimum income floor applies to you, and your income is below that floor, then your Universal Credit payment will be lower than if we had based the payment on your actual earnings. This might mean you need to look for additional work.
If you (1) are self-employed as a sole proprietorship, an independent contractor or freelancer and (2) earn $400 or more, you may need to pay SE tax. This is true even if you are paid in cash and do not receive a 1099-MISC. Keep in mind, you may be able to offset this income if you have qualifying expenses.
The 50 | 30 | 20 rule is a simple budgeting method that can help keep your finances on track. It breaks down to 50% of income for essentials, 30% for wants, and 20% towards savings or debt. Following this or other budgeting methods can help you achieve financial independence.
You do this by subtracting your business expenses from your business income. If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040 or 1040-SR. If your expenses are more than your income, the difference is a net loss.
As a self-employed individual, you pay both income tax and a 15.3% self-employment tax (Social Security & Medicare) on 92.35% of your net earnings (profit after business deductions), plus potential state income tax, requiring quarterly estimated tax payments to the IRS to avoid penalties, often setting aside 25-30% of income for taxes.
Choose the Right Business Structure
Sole proprietors and single-member LLCs pay full self-employment tax on all profits. However, if your income exceeds a certain threshold, switching to an S Corporation (S-Corp) could significantly reduce your SE taxes.
Business expenses you can report if you're self-employed
Most of the time, if you made less than $5,000 and you're not self-employed, you don't have to file a federal tax return. But here's what many people miss you could still get money back. For example, if your job withheld just $300 in federal taxes, filing a return could get that $300 refunded.
You will need to show that your self employment is organised, developed and carried out regularly in expectation of profit. It must also be your main form of employment. If you cannot demonstrate these things, you will need to agree to look for and be available for other work in order to claim Universal Credit.
For the 2025 tax year (filed in 2026), you generally need to file if your gross income meets or exceeds the standard deduction for your filing status, such as $15,750 for Single, $23,625 for Head of Household, and $31,500 for Married Filing Jointly, with higher thresholds for those 65 and older; however, different rules apply to dependents, self-employment income ($400+), and Married Filing Separately ($5+), and you might still file to claim credits or get refunds.
The earnings threshold, which is determined by the Minister of Employment and Labour from time to time in terms of the Basic Conditions of Employment Act of 1997 (the BCEA), has been increased to R261748,45 per year (R 21812,37 per month) with effect from 1 April 2025. This is an increase of 2,9%.