How Will My Business Affect My Benefits?

Originally written by Wendy Sloane, updated by the editorial team on 2nd April 2026

W.A asks

I am a single mother on benefits and am looking to set up a soft play centre in the town where I live with a set of similar mums. I am aware of the financial obligations of setting up this business, and am looking to get funding.

While the business is in its infancy, where do I stand with benefits? While the first few months will generate turnover, this will not be a wage to me or the other people involved, so how will my benefits be affected?

I am currently putting together a business plan and doing market research and I am only in the first stages. Are you aware of any guidance or possible funding charities that may be of assistance?

First, that's fantastic news that you are looking to set up your own business - and even taking the first step by writing a business plan. It sounds as if it will be quite a challenge, but the rewards are well worth it. It also seem as if you are going into a field which interests you and will, in the long-term, be fun as well as rewarding, with other like-minded people to work alongside you.

However, you are in a bit of a conundrum over what it will mean to your benefits if you start your own business, which is understandable. Most likely the benefits you receive now would be Universal Credit - while of course you also get child benefit, which will not be affected no matter how much you earn in your own business.

If you start working without generating any income you should still qualify for Universal Credit, as well as housing benefit, if you get it now. Your best bet is to talk to your Status Officer at your Tax Office (HM Revenue & Customs) to determine whether – or when - you will have to register as self-employed, and what this will mean as far as benefits and National Insurance payments etc will mean. If you earn less than a specific amount, your other benefits should not be affected anyway.

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You may qualify for specific grants, low-cost loans and other financial help, depending on your age and the type of business. The Prince's Trust, for example, can provide some incentives.

The New Deal for Lone Parents (NDLP) programme ended in 2011. It can help provide you with necessary training, point you in the direction of business advice, and – perhaps more importantly – give you money/grants to help pay for childcare and transport.

The government website GOV.UK can help with advice on getting grants, loans and other forms of financial assistance. See www.gov.uk for details, and see if you could qualify to receive loans under the Government's Growth Guarantee Scheme. Borrowing from friends and family is also a way some people start up on their own, perhaps giving them a share in the business in return.

Finally, finish up your business plan. It sounds as though you could have a very interesting new career ahead of you!

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Working Parent Support Checker lets you see what financial support a working parent could be entitled to, from free childcare hours and tax-free childcare to Child Benefit and Universal Credit help. Try it now →

Showing 20 of 40 questions

Ask A Working Mum a Question

Zan 24/06/2021 at 12:39 pm

Hi, I'm a full time carer for my disabled son and husband and we are surviving on benefits. I want to start an online business which would probably not earn anything for the next 18 months. Would it affect the benefits we are receiving? I don't want us to be unable to buy food and pay rent if everything stops and no incoming profit from business either. Really worried, as I sincerely want to be able to have a chance to be financial independent.

Skyrobi 11/02/2021 at 11:04 am

Hi, I'm a fulltime carer for my 9 year old who recieves DLA, and I get carers allowance, child tax credit, child and housing benefit. I would like to open an online bookshop, specialising in books for all harmed by abusers. I will spend around 2 hours a day working online. What would be the best business model, so that I will still be considered my child's full time carer please? I'm doing the store to keep me sane, and so that in the future if my child doesn't need me so much I can run with it. Many thanks for your advice.

Lucy 18/09/2020 at 6:14 pm

I am looking at setting my own business up where i will rent some chairs out to other people but was wondering how this will affect my Benfit’s currently on income support me & partner have 3 children one which is disabled so my partner gets careers allowance as well & my child gets dla we also get Housein & council tax support would theses stop ? As at first I probably won’t be earning the rent i will receive from renting chairs will cover rent for premises

Jane 17/09/2020 at 8:47 pm

Hello
I currently work 33hours a week but get topped up about £250 a month to help with rent as on low income Looking to set up own business along side of work..is there a bit of leeway before you get benefits stopped? Just so you can find your feet? Also would there be any grants that would apply yo me or would i need to be unemployed to get them? Thanks

Ab 03/09/2020 at 5:32 pm

We are a family and we have 3 kids.My husband is self-employed and currently on UC .We are thinking of opening our own business but we are not sure what will happen to our UC.Will we loose it straight away?How about rent payments?

Rok 16/08/2020 at 1:02 pm

I am 15 years old and I wanted to try out dropping shipping with my parents Permission but my parents receive benefits and I wanted to know if that would affect their benefits or the kids benefits

Shamy 24/07/2020 at 6:44 pm

Hello. I am under child benefits and house benefits and I work part time now . But I will like to open a business by myself if recycling cardboards and I was wondering how it will be effecting on my business or what will be happening. I heard from people that it will effect after I started my business after a year.

cat 14/07/2020 at 2:59 pm

hi im a single mum of 2 boys im about to open a business taking over from previous owner , im currently on pip for mental health due to nervous breakdwn after my marriage broke down n I had to be homeless , then my dad died and I was grief stricken. My son is on dla im his carer , my two sons will be returning to school again soon now I want back into the world to be able to provide n live again and to open this business to get a better life for me n my boys im afraid incase it doesn't work and im stripped of all my benifets n left much worse off, im in middle of a divorce aswell and dnt knw how this would all be effected would i still get legal aid i get income support n child benifet n child tax credits im all confused on how life will work out and how to go about things the right way any help would be much appreciated

Tigga 09/07/2020 at 12:41 pm

Hi, I’m currently on esa and claim pip my wife is my carer and we have 3 children so obviously also get help with rent costs. My question is me and my wife want to set up our own business but we are afraid that we won’t get any help with the rent and lose all our benefits, can anyone shine any light on where we would stand to start off with? Thanks

Bernice 17/06/2020 at 8:44 am

Advice for single parents. Find a professional at the CAB or a local charity. Give them the authority to apply for things for you. Getting benefits and then having them cut off for no good reason is my experience. My only hope of getting UC and other benefits is to threaten court action, write to your local MP. They will refer you to someone. As I’ve been struggling a lot I complained to the government and they agreed to pay half my rent arrears. It’s good, but if you take your case to a judge they usually order a 0 balance. If you earn under 25,000 you are living in poverty. Best wishes moms/ super moms.

Kay 18/04/2020 at 2:50 pm

Hi I am a single mum working 37.5 hours a week. My tax home pay is to it roughly £1090. I am planning on starting up a small from home business. To I have to Declare myself as a sole trader and will my benefits be cut? I am currently receiving working tax credits and child tax credits.

Thankyou

Dee 14/02/2020 at 2:29 pm

Can I register my business? And still claim benefits if I have no income from the business yet. The reason I'm asking is to book events In the future, they're asking for. For my business registration. Im in Northampton district.
Kind regards

Lizzie 06/09/2019 at 9:46 am

Hello, so I have 2 young child and they will be starting full time school in 2 years time. I known it a while away fron now but I won't to make sure I can truly do what I plan to do for them and myself. The situation is that I do have a business plan to work from home to manage the term times in the future. I plan to work within the industry that my own business is. 25 hours a week or less. I have gone on turn2u which stated that I'll still be eligible for some benefits as it's class as low income. But I would like on the side to proceed with my business plan, and sell my produce, as I am setting up my business I would be investing the money that I receive, into the business and ill not receiving a wage. The question that's I'm asking is weather my benefits would be stopped? I do have 2 children to support and a home, i don't want to risk affecting those the best I can. Second question is , Do I need to inform HM Revenue and Customs about my business and working part time and register as some status?

Be looking forward to hearing your advice.

Kinds regards
Elizabeth

Sam 22/03/2019 at 8:13 pm

Hi
I’m working 16hurs a week and I’m receiving housing benefit right now and I don’t have any kids. I’m planning to make a first business for my self that to open a small mobile shop so my question is, because it’s a new and first, do I still get any benefits? And what I can do?

Desperate 10/09/2018 at 12:54 pm

Hi, I work 30 hrs a week, but I want to leave my employment and work from home but get tax credit and housing benefit as my wage is low. What if I don’t earn enough to pay my rent will I get any help or I’d lose my accommodation.

Myles Elliott 28/08/2018 at 11:48 am

Hi, i recently declared myself as self employed whilst claiming my benefits. Money coming in from work- can i reinvest that money in to my business? Im not earning money to live on yet.
Not sure what the rules are.

AWorkingMum Editor 30/07/2018 at 3:10 pm

The link here should help answer your question. Invariably, your benefits will be affected as the government will not allow you to earn money and keep your benefits. We wish you all the best if you decide to take the leap.

Zoe 29/07/2018 at 8:29 pm

I’m a single mum and completely estranged from my Childs father so have never received any financial support. I have various mental health conditions which have meant I can’t get a normal job but I’m desperate to use my brain and work so have started the foundations of a business from home. I’ve not launched anything officially and not received any money or sold a thing but really want to give it a go. I’m scared that my benefits will be affected and then my health will prevent me if I can’t cope or make any money then I’ll be left in a worse place and undo all the hard work I’ve put into my recovery. However I’m desperate to give it a go for nothing but confidence and passion in the field of promoting Single Mothers which is what my business is aimed at. Any advise would be gratefully appreciated.

Stacey 19/07/2018 at 12:00 pm

Hi

I'm 29, single parent of a 3 and 6 year old and receive housing benefit, income support and child tax credits

I do sewing as a hobby and alot if people have shown interest I my makes so I thought about starting selling then from home.

How is income and hours worked calculated? If I don't earn enough what happens to my benefits

I literally have no idea where to start

Could I have some advice please on all the Bove

AWorkingMum Editor 13/07/2018 at 10:49 am

Unfortunately, the only option you have is whichThere is help out there from the government, but it will always be minimal.

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