what would happen please if?

Snow_queen,

Yes, they work it out as an average. You have to inform them if your income increases or decreases by £2,500 and they will alter your award in that case.

so what would happen if it dropped to say 12 hours or 10 hours?

I think it's like Fran says - they base it on an average.

More to the point - if you're self-employed, they usually just take your word for it on how many hours you're doing. The definition of what counts as "time at work" for self-employed people can be a bit hazy - so no-one really checks.

So I'd say, use your judgement, and don't worry about it. I guess they might be suspicious if your earnings for the whole tax year are lower than what you would get on the National Minimum Wage for 16 hours a week.