If you are claiming benefits before you start trading, and/or have a part-time/full time job, you can request 'Housing Benefit Run On' (see the DWP website for more details on Housing Benefit Run On). This entitles you to one month of Housing Benefit/Council Tax payments after you have signed off. After that you are on your own for a while. After a few months, if you are still on a low oncome you can apply for Housing Benefit/Council Tax Relief again, (even if you are self employed).
If you have not claimed this benefit before you may be entitled to it. You will have to send in your accounts, and may need to do so every few months throughout the first year.
Once you have filled in a 'self-assessment form,' you will receive a letter from HMRC stating the amount of money you have earned. This is your profit only (income minus the expenses of running a business) and will happen every year.
You can send a photocopy of this document to your Housing Benefit office and they can make a future assessment based on this document. Claims can months to sort out so be prepared to wait. It is possible to run a business for a few years claiming full or or partial Housing Benefit/Council Tax Relief. Housing Benefit is not a taxable form of income, so it does not count against you in any way if you need it claim it.
Please don't forget Working Tax Credit, Child Tax Credit and Family Tax Credit don't forget if you are in work, either self employed, or with some employed work for 30 hours or over and are on a low income then you might be entitled to extra payments from the HMRC
Useful Contacts
Department for Work and Pensions
Public Enquiries Tel: 020 7712 2171
Email: peo@dwp.gov.uk
Tax Credit Helpline
Tel: 0845 300 3900