There is no requirement to be working to apply for citizenship.
Unemployment does not affect citizenship applications.
There are no income, earnings, savings nor self-sufficiency requirements for British citizenship.
The requirement is lawful residence.
The CSI requirement does not apply to everyone, see below. If you have a PR card or old ILR (other than settled status), this isn't at all relevant. 
The Home Office updated their guidance on good character at the end of September.
See: Good Character update. Treaty rights and lawful residence for applicants relying on settled status
Applicants relying on settled status to apply for citizenship may be asked to show that they were exercising treaty rights, or that they were family members of those who were exercising treaty rights, in the period leading up to their being granted settled status.
Page 28 of the updated Nationality Policy says:
You must assess whether the individual has been here lawfully during their 3 or 5 year residential period prior to pre-settled status or settled status, by considering on the balance of probabilities whether they were here:
- as a qualified person (such as a worker, student, self-employed, self-sufficient, retired or incapacitated person)
- as the family member of such a person.
Lawful residence after obtaining settled or pre-settled status
Once you have been granted pre-settled or settled status, you would be lawfully resident in the UK under that status. There is no longer a requirement to exercise treaty rights, nor have CSI cover for any periods of studies or self-sufficiency, since these are not requirements under the EUSS. That means applicants who did not meet the criteria of being "lawfully resident" under EU rules before being granted pre-settled or settled status, can apply for citizenship 3 or 5 years after being granted pre-settled or settled status, depending on whether they are married to a British spouse or not. People who obtained pre-settled status before qualifying for settled status can start counting from the time they were granted pre-settled status, since they would have been lawfully resident under UK immigration rules from when they were granted this status. It is possible to mix a period of lawful residence under EU rules with a period of lawful residence under the EUSS as long as it adds up to a continuous 3 or 5 year period.Example 1
Sarah is a Dutch national who came to the UK as a student in 2012 and did not have CSI cover. She then married Joe, a British national and had two children, so she stayed at home looking after them when they were little. In 2018, she started working 20 hours a week, then applied for settled status when the scheme opened in 2019. Her one year contract ended in August 2019 and she's not worked since.
| Period | Activity | Lawful residence (as at end of June 2020) |
| September 2012-June 2015 | Student without CSI | 0 |
| August 2015-September 2018 | Stay at home parent (self-sufficient without CSI) | 0 |
| September 2018-August 2019 | Part-time worker | 1 year |
| April 2019 | Granted settled status | 1 year 2 months |
Example 2
Pierre is a French national who came here to study full-time in September 2014 and had no CSI, he started working in December 2017 and was granted pre-settled status in January 2019. He quit his job to go back to college in September 2019. He was granted settled status in October 2019.
As he started exercising treaty rights as a worker in December 2017, his period of lawful residence starts at this point. He was granted pre-settled status before he quit his job, so he's been lawfully resident ever since he started working, and would be able to apply for citizenship after 5 years' lawful residence in December 2022.
Non-EEA family members
The treaty rights criteria also apply to family members from outside the EEA, in this case, the EEA sponsor (i.e. spouse, civil partner, parent, etc.) should have been lawfully resident, that means exercising treaty rights or having acquired PR status or holding ILR (other than settled status). Non-EEA nationals cannot exercise treaty rights, their status depends on the EEA national sponsor meeting these criteria. The CSI requirement - when it does and does not apply
The CSI requirement applies to periods spent as a student or a self-sufficient person. If you were a minor or living with your parents/family while studying, they may be able to sponsor you as a dependent, see dependents below. It does not apply to workers (employees) nor self-employed people (company directors, business owners, freelancers, etc.) If you were working or self-employed while studying, you do not need CSI.You would be classed as self-sufficient if:- You were living off your own capital and savings
- You had a passive income, such as rental income, income from shares, stocks, investments, etc.
- You were in receipt of a pension
- You were supported by a family member who does not fall under the category of a qualified person who can sponsor you. This could be because:
- They were not living in the UK, for example, your parents back home
- They are British citizens without dual UK/EU citizenship, for example, you are a stay-at-home parent and your spouse is British
- They are from outside the EEA, for example, if you are married to a non-EU spouse and you don't work.
If you were in receipt of public funds as your main source of income, you were not self-sufficient for that period and CSI is not relevant. Being a job seeker is a form of exercising treaty rights, but only for a limited period of time, usually:- Up to 3 months if you hadn't previously been working in the UK
- Up to 6 months if you were working or self-employed and lost your job
- It may be possible to retain worker status for longer in some cases, especially if you worked continuously for over a year. PR applications were approved with over 6 months of unemployment.
Gaps of up to 6 months not exercising treaty rights are OK. Not using the NHS or having paid for private treatment, going back to your country for treatment, etc. has no relevance to this.Part-time and intermittent work
The requirement is for work to be 'genuine and effective'. There is no minimum earnings requirement. However, the Home Office has taken it upon themselves to examine your case a bit more closely if your income falls below the NI threshold. You do not fail because you are under some threshold, but they may scrutinise the 'genuineness and effectiveness' a bit more.
You can find historical data for previous years in this table: National Insurance Thresholds Rates and allowances: National Insurance contributions - GOV.UK
Voluntary NICs and paying for gaps in NICs do not have any effect on this, these are for your state pension and should only be paid after getting a pension forecast and making sure you really need to pay for those gaps, doing so will not change anything in terms of lawful residence in the past.The criteria are different for self-employment, where there is no minimum income threshold, but you need to show you were actively trading or providing a service. See also:- Evidence of Comprehensive Sickness Insurance (CSI)
- Where does the CSI requirement come from?
- EHIC cards and CSI
- Voluntary NI contributions
- Using the NHS and paying for treatment
Dependants and family members
Family members who exercise treaty rights or have acquired PR status can sponsor those who do not. These include non-working spouses, children and dependent students.
The sponsor has to be an EEA national. UK nationals cannot sponsor family members, unless they are dual UK/EEA nationals.See:Unmarried partners where the applicant was financially dependent on an EEA national partner 
Please refer to our lawyer's comment:
Originally posted by Gabriella B
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Derivative rights
If you were responsible for a child for a certain period of time, you may well have a derivative right of residence even if you did not exercise treaty rights as a qualified person during that period. This can be quite a complex area, so you need to provide details regarding your children to be able to assess a lawful residence. The treaty rights requirement - when it does and does not apply
Permanent residence
The guidance says:
If an EEA or Swiss national or their family member has a permanent residence card, you can accept that they were lawfully present in the UK for the 5 year period before it was issued, and have remained lawfully in the UK since then. They will be able to rely on the permanent residence card to cover the period until 30 June 2021, unless they have been granted status under the EU Settlement Scheme. This is provided they have not lost their permanent residence, for example by being out of the UK for more than 2 years. The application form asks the applicant to enter their permanent card number along with the date of issue. This will give you details of their lawful stay in the UK
You can still use your PR card to show lawful residence when applying with settled status, unless you had lost PR status due to being out of the country for 2 years or longer.
It is not necessary to have a PR card to have acquired PR status, as the guidance also says:
People who were in the UK in accordance with EU law may have acquired permanent residence at some point, despite not having a document. A right to reside under EU law exists automatically where the terms of the EEA Regulations are met. If they had time periods where they were not here in accordance with the EEA Regulations you must determine if they were here lawfully on the basis that they had previously acquired permanent residence and were no longer required to meet certain requirements, such as being a qualified person.
The updated guidance says:
From 1 January 2021 until 30 June 2021, during the “Grace Period”, a person who does not have EUSS leave can still rely on an EEA residence right to reside here lawfully, but cannot apply for a document confirming that right. If they do not already hold a permanent residence document they will therefore not be able to apply to naturalise without first gaining EUSS ILR. However, in any subsequent naturalisation application, they will still be able to provide evidence that they were exercising an EEA right prior to the grant of EUSS ILR to show that they were lawfully resident throughout the relevant residential period.
See also:- Permanent Residence (PR) status and how it's acquired
- Qualifying periods and evidence - example scenarios
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You need to have ILR, including settled status, to be able to apply for citizenship. From January 1st 2021, you can only apply with a PR card if you haven't got settled status. PR, ILR or settled status requirement ILR obtained before 2006
The updated guidance says:
There may be applicants who would like to naturalise as British citizens who have been resident in the UK since before the introduction of permanent residence in 2006 and are therefore free from time restrictions. The applicant is asked on the application form to indicate how they have acquired the status ‘free from time restrictions’. Such people would be here lawfully, unless they lost ILR through excessive absences from the UK
That means if you have ILR, you don't need to concern yourself with the treaty rights criteria noted in the updated guidance, unless your ILR had lapsed, this happens after spending two years or longer out of the UK after ILR was granted. Although settled status is also ILR, the above does not apply to settled status. The same criteria apply to ILR under the Windrush Scheme, even when the BRP may be issued recently, this would be based on a period of residence starting before the end of 1988. Lawful residence on the online AN form
Once you finish answering questions, you will reach the section headed Documents, where you will find a checklist of documents to be provided, depending on the answers given on the form. This checklist will usually have the items shown below:
You need to tick the boxes in order to proceed.Applicants who do not meet the criteria, please refer to this post: Applicants who do not meet the lawful residence criteria for citizenship - UKCEN Citizenship and Residence for European Nationals and their families See also: