The early stages of a business are the hardest. Whether you claim government benefits and are looking to start your own limited company, or you are already a director and need financial support, you may be entitled to some benefits to help ease some of your business expenses.
In this article, we’ll explore the benefits that you could claim as a business owner. We’ll also explain their qualifying criteria and how to claim them.
If you’re a director, you take a salary from your company as an employee, and have children under 11 years old, you may be eligible for tax-free childcare. You could receive up to £2,000 per child or up to £4,000 if your child has a disability, as well as 30 hours of free childcare (if you live in England).
The qualifying criteria for childcare benefits depend on:
- Your employment status
- Your income (including your spouse/partner’s income)
- Your children’s age(s) and their health conditions
- Your immigration status
You can find the full details of childcare benefits eligibility on the GOV.UK website.
You must be earning at least the National Minimum Wage (NMW) for your age group over the next 3 months to claim childcare benefits. If you have an annual salary but you don’t get paid regularly, you should use an average of your expected earnings in the current tax year.
If you’re eligible, you can use the allowance to simply reduce your tax bill, support your family, or cover the cost of approved childcare services such as childminders, nurseries, and nannies. You can choose your provider, but they must be registered for the childcare benefit scheme first.
How to claim childcare benefits
You can apply for childcare benefits online. You’ll need to provide:
- Your and your partner’s details (if applicable)
- Your National Insurance number
- Your Unique Taxpayer Reference (UTR) if you’re self-employed
You need to make a separate application for each child. Once you’ve signed up, you’ll be notified about the benefits that you’ll receive, and you can use the account(s) to pay your childcare provider.
Statutory Sick Pay
If you meet the following Statutory Sick Pay (SSP) qualifying conditions, you can receive SSP as an owner of a limited company:
- You must be unwell or unfit to work for at least 4 consecutive days (the first 3 days are known as ‘waiting days’)
- Your average weekly earnings must be at least £123, which is the Lower Earnings Limit (LEL) for the current tax year (this includes director fees, dividends, or wages from any other role you have in the company)
Your eligibility might differ depending on your role within the company and how often you get paid.
If you’re not based in the UK from the first day of illness, you can still claim SSP, providing that you meet the qualifying criteria and pay Class 1 (Secondary) National Insurance Contributions (NIC).
How to claim SSP
You can use the SSP calculator to find out how much you can claim.
Limited company owners can claim the ‘new style’ Jobseeker’s Allowance (JSA) if they meet the eligibility criteria and ongoing requirements.
The start-up phase of a business is expensive, and you may find yourself relying on your personal savings to get it off the ground or navigate a tough financial market. But JSA could provide temporary support while your company grows.
One of the main qualifying conditions for JSA is that your personal and business capital is less than £16,000. This limit considers your personal savings, your partner’s savings (if applicable), as well as business assets and any dividends you might be receiving from your company.
To claim the new style JSA, you need to:
- Have worked and paid Class 1 NICs within the last 2-3 years
- Be over 18
- Be under the State Pension age
- Be working less than 16 hours a week
- Be available to work
- Be actively looking for work
- Not being in full-time education
- Not be claiming Income Support
If you’re eligible, you’ll get JSA for up to 6 months. You could get £67.20 a week if you’re aged between 18 and 24, and £84.80 a week if you’re over 25.
Your JSA allowance will depend on your individual circumstances. For example, you could get less if you have a part-time job or pension.
You usually need to show evidence that you’re actively looking for a full-time job (35 hours a week or more). However, if you’re a carer, have children under 13, or if you can’t work full-time due to a disability, you can look for a job with fewer hours and still claim JSA.
JSA and tax
Even though it’s a government benefit, some JSA payments count as taxable income. The tax implications of your JSA depend on several conditions, such as if you’re claiming for a dependent child or if you’re claiming as a single person or a couple.
You can find more information about JSA and tax liability on the GOV website.
How to claim JSA
You can check your eligibility, how much you could receive, and apply for JSA via the government’s website.
You could receive Universal Credit if you’re not eligible for JSA. Universal Credit can help alleviate some of the financial strain if you’re on a low income, don’t take a salary from your business, or if you have childcare or caring costs to cover whilst running your company.
To get Universal Credit, you need to:
- Be aged 18 or over
- Be under the State Pension age
- Live in the UK (if you’re moving abroad permanently or you’re already abroad, you cannot claim Universal Credit)
- Have less than £16,000 in income and personal savings (often referred to as ‘capital’. This includes your partner’s income and savings)
The qualifying conditions and payments are based on your individual situation. For example, you can still claim Universal Credit if you have more than £16,000 in savings, but it will impact the allowance you get.
This also means that there are no specific conditions that eliminate your eligibility when you meet them. Each application is reviewed on a case-by-case basis, and your circumstances are checked periodically to assess your eligibility.
How to claim Universal Credit
Visit the GOV website for full details on the qualifying criteria, how Universal Credit is paid to you, and how to apply.
All women in the UK can take up to 52 weeks of maternity leave from work to look after themselves during pregnancy and their baby once it is born. This period is made up of 26 weeks of standard maternity leave and 26 weeks of additional leave.
You can claim one of two types of benefits at any one time:
- Statutory Maternity Pay (SMP), paid by the employer
- Maternity Allowance (MA), paid by the Department of Work and Pensions (DWP)
The type of benefit that you can claim depends on:
- The size of your company and any excess income that it makes
- Whether you’re a shareholder or the sole director of your limited company
- Whether you’re a director of any other company in which you have no shares
- Whether there are any other directors that could cover your role whilst you’re on maternity leave
Statutory Maternity Pay
To claim SMP as a director, you cannot be a registered shareholder of your company. If you are both, you won’t qualify for SMP unless there is another employee who can sufficiently take on your role in your absence and make sure that the company generates enough income to pay your SMP.
The basic criteria for SMP are:
- Your average weekly earnings must be at least £123
- You must give maternity leave notice at least 15 weeks before your due date
- You must have been employed by the company for at least 26 consecutive weeks before the qualifying week (as explained above)
In the first 6 weeks, you’ll get 90% of your average weekly earnings and a standard rate of roughly £139.58 for the remaining 33 weeks.
If you’re not eligible for SMP or can’t afford to pay yourself SMP, you could apply for MA if you are:
- Employed by your company
- Registered as self-employed and pay Class 2 NIC (or have a Small Earnings Exception Certificate)
- Previously self-employed or recently employed
- Neither self-employed nor employed, but often contribute to the business of your civil partner or self-employed spouse
- Your total average income must be at least £30 per week (the MA threshold)
You can claim MA for up to 39 weeks if you’ve been employed (or self-employed) for at least 26 consecutive weeks out of the 66-week test period. This includes the week before your due date.
Based on your eligibility, you can get an MA allowance of £27 a week for roughly 14 weeks or 90% of your gross average weekly earnings (up to a maximum of £138.58 a week).
How to claim maternity pay
You must provide a written request for SMP in the appropriate time frame.
To apply for MA, you need to complete a claim form.
Other benefits you could claim
There are many government benefits that you could be entitled to as a limited company owner. As well as the above, you could get other forms of financial support, such as:
- Disability Living Allowance for children
- Bereavement Support
- Council Tax reduction
- Support for mortgage interest (SMI)
We hope you found this guide comprehensive and helpful in understanding the different types of benefits that you could claim as a limited company owner. Remember that the requirements and application processes can be complicated, so you may want to speak to a benefits advisor before getting started.
If you have any comments, please feel free to let us know below, or get in touch with our team if you have any questions.