Croydon Council Tax Reduction for Self-Employed: The Minimum Income Floor Explained

For non-disabled self-employed claimants in Croydon, the council applies a Minimum Income Floor after the first year of self-employment. If your actual income is lower, it uses the floor amount when calculating your income band.

What the MIF Is

Croydon's working-age Council Tax Support scheme applies a Minimum Income Floor to claimants or partners with self-employed income, one year after they started self-employment. If actual net earnings fall below the MIF, the council treats them as if they earned the MIF amount when calculating the income band.

The 2026/27 MIF rates:

• Single claimants and couples: £392.04/week
• Lone parents: £250.96/week

So after their first year of self-employment, a sole trader earning an actual profit of £80 in a slow week gets assessed as if they earned £392.04. That pushes a standard working-age claimant into the £358–£407.99 band — a 15% discount — instead of the £0–£157.99 band where their real income would place them (75% discount). The difference on a Band D property is roughly £1,560/year.

Why It Exists

The MIF prevents people from reporting artificially low self-employment income to claim maximum Council Tax support. It mirrors a similar mechanism in Universal Credit. The assumption is that anyone in established self-employment should be earning at least the equivalent of minimum wage for their expected hours.

The problem: it doesn't distinguish between a business having a bad month and someone gaming the system. Seasonal workers, new businesses in their first year, and gig workers with genuinely variable income all get hit.

Who Is Exempt

The MIF does not apply during your first year of self-employment. It also does not apply to disabled working claims. If you or your partner qualifies under the protected disability rules (receiving PIP, DLA, or ESA), the MIF does not apply. Your CTS is calculated using your actual net self-employed earnings.

This exemption was introduced in April 2023 when Croydon specifically removed the MIF for disabled working households. On top of that, disabled working claimants get a £50/week earned income disregard — so your actual earnings are reduced by £50 before being matched against the income bands.

How Self-Employment Income Is Assessed

If the MIF doesn't apply (because you're exempt or your earnings exceed it), Croydon calculates your net self-employed income as:

1. Total business revenue
2. Minus allowable business expenses
3. Minus tax and National Insurance
4. Equals net weekly self-employed profit

That figure goes into the income band matrix alongside any other household income. If the result is below the MIF and you're not exempt, the MIF figure replaces it.

What You Can Do

If you've been self-employed for more than a year and your business isn't generating the MIF level of income yet, the options are limited:

• Check whether you or your partner qualify for the disability exemption — if so, the MIF drops away entirely
• Report your actual earnings anyway — the council is required to assess them against the MIF, but having accurate records matters if you later appeal
• Apply for hardship relief — if the MIF calculation leaves you unable to pay, Section 13A discretionary relief or the Hardship Scheme (if you have dependants) may cover the gap

For a detailed walkthrough of how the MIF interacts with UC self-employment income, plus how to document your actual earnings for the application, see the Croydon Council Tax Reduction guide.

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