Help and support for the self-employed during and after coronavirus

If you’re self-employed, the government has announced a range of measures to help and support you. This guide tells you more about the schemes available and how they will affect you if you’re a sole trader, work in the gig economy or run your own business. There’s also information about the welfare benefits you might be entitled to claim if your income has dropped or you can’t work because you’re sick or self-isolating.

Extension to the self-employment Income Support scheme and other help

Support if you’re self-employed will continue until 30 September 2021.

The last grant covered the period from February to April 2021, and paid 80% of your average monthly profits for three months, up to a maximum total of £7,500.

The deadline for applying was 30 June 2021.

To be eligible for this grant you must have already filed a Self-Assessment tax return for 2019/20.

A further grant covers the period between May and September.

The amount you get will depend on how much your turnover has fallen. If your turnover has gone down by 30% or more, you will continue to get 80% of your average monthly profits for three months, up to a maximum total of £7,500.

If your turnover has fallen by less than 30%, you will get a grant of 30% of your average monthly profits for three months, up to a maximum total of £2,850.

Applications for this grant opened in late July.

Eligibility for self-employment Income Support scheme

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If you’ve been eligible for previous Income Support scheme grants and your self-employment has continued to be affected because of coronavirus, you should continue to be entitled to these grants.

To qualify, you must earn more than half your income from self-employment, have submitted a tax return for 2019/20 and have:

  • an average trading profit of less than £50,000 for the tax year 2017/18, 2018/19 and 2019/20.

Or, if you haven’t been trading for all these years, you need:

  • a trading profit of less than £50,000 for 2019/20.

HMRC will use your average trading profits from 2017/18, 2018/19 and 2019/20 to work out the size of your grant.

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If you’re self-employed, but took time off during 2018/19 to care for new children, or a newly adopted child, you can still claim through the scheme. You will be assessed on either your 2017/18 tax return or your 2016/17 and 2017/18 tax return.

This scheme is open to sole traders and members of partnerships.

If you pay yourself a salary and dividends through a company, you will not be eligible, but might be helped by the coronavirus job retention scheme if you’re earning through PAYE.

If you are not eligible for this grant, you will still be able to access other government support, including benefits and business support grants.

If you’re eligible for the Income Support grant and are waiting for it to be paid, you may be able to claim Universal Credit if your household income is low and you and your partner  have savings of less than £16,000.

Like the previous grants, you will need to declare the latest grants as income when they are paid. This is likely to significantly reduce or completely remove any Universal Credit payment you will get depending on when you receive the grant and your assessment period.

This means you will need to plan ahead for how you will pay essential costs.

Claiming the grant does not affect your chances of being accepted for a payment holiday if you’re struggling to pay your bills.

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Look out for scams

The self-employment Income Support scheme is likely to be targeted by scammers claiming to be from HMRC. If you’re self-employed you should have already received an email from HMRC explaining the scheme and telling you there is no reason to contact them about this.

If you are contacted by email, phone or text by someone claiming to be from HMRC at this time offering you the Income Support grant, tax refund or any other financial help, this is a scam.

Test and Trace Support Payment

You will be entitled to a payment of £500, If you’re told to self-isolate by NHS Test and Trace system, can’t work from home and are claiming:

  • Universal Credit
  • Working Tax Credit
  • Income-related Employment and Support Allowance
  • Income-based Jobseeker’s Allowance
  • Income Support
  • Pension Credit, or
  • Housing Benefit

In Scotland, this is called the Self-Isolation Support Grant. There is no similar payment available in Northern Ireland.

In Wales, you could apply for this payment from 14 December 2020. It will be backdated to 23 October 2020 and has been extended to cover parents and carers on low incomes.

Your local authority will make this payment.

You will have to show proof of your employment to qualify and checks will be carried out to confirm you’re unable to work from home.

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What happens if you can’t work because you’re sick or having to self-isolate

Self-employed sick pay and coronavirus

If you’re self-employed you can’t claim Statutory Sick Pay.

If you’ve paid enough National Insurance Contributions, you might be able to claim new style Employment and Support Allowance (ESA) if you’re ill.

ESA and coronavirus

The government has said you’ll now get paid from the first day of the claim, rather than after eight days.

If this is the first time you’ve applied for ESA, you’ll have to fill in form ESA 1 and send a fit note from NHS 111 with your claim form to show that you’re not fit for work. You should get the first payment into your bank or building society account within two weeks.

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You might also be able to claim elements of Universal Credit if you need help with other costs for children or housing if you and your partner have savings of less than £16,000. Their income will also be taken into account as part of the claim.

What happens if you don’t qualify for Employment and Support Allowance (ESA)?

You might be able to claim the limited capability for work and work-related activity element of Universal Credit if you and your partner have savings of less than £16,000. Your partner's income will also be taken into account as part of the claim.

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What you can do if your income has dropped significantly

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Universal Credit for self-employed and coronavirus

If you are feeling well but your work has dried up, you’re waiting for the self-employment Income Support grant and you (and your partner  if you live as a couple) have savings of less than £16,000, then you might be able to claim Universal Credit until the self-employment Income Support scheme starts

You might be able to claim elements for other costs, such as housing, caring responsibilities or bringing up children.

If you have savings of between £6,000 and £16,000, the amount of Universal Credit you get will be reduced.

Universal Credit and the minimum income floor

The minimum income floor has been temporarily abolished.

The ‘minimum income floor’ is a formula used to work out how much Universal Credit you should get when you’re self-employed. It is based on the national minimum wage and an assumed number of hours worked,  whether you actually work them or not.

Abolishing the minimum income floor should do two things: increase the amount of Universal Credit you are entitled to claim if you’re not able to work, and allow you to keep your self-employed status.

Applying for Universal Credit

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If you’re claiming Universal Credit, you will have to wait at least five weeks for the first payment, so don’t delay making a claim.

You can make a claim for an advance payment while you are waiting for your Universal Credit payment. You can talk to your work coach about how to do this once you’ve made your claim. The advance payment is a loan that will need to be repaid out of future Universal Credit payments, so make sure you only ask for what you need.

If you stop claiming Universal Credit before you have repaid the advance payment, you will have to agree a repayment plan with the Department for Work and Pensions (DWP).

If you or your partner are already getting any of the benefits being replaced by Universal Credit, including Tax Credits, Housing Benefit or Income Support, these benefits will stop. Your benefit income for these costs will be reassessed as part of the Universal Credit claim.

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If you decide to end your self-employment

If you decide to end your self-employment and apply for benefits, what you can claim depends on the type of National Insurance contributions you were paying and the amount you have in household savings.

If you were only paying Class 2 National Insurance contributions

You might be able to survive now the Government has announced the self-employment Income Support scheme but, if you decide to end your self-employment and look for paid work, you usually won’t be able to claim new-style Jobseeker’s Allowance (JSA) if you were only paying Class-2 National Insurance contributions.

Universal Credit is based on household income and savings. You won’t be able to claim it if you have savings over £16,000 as it is a means-tested benefit. You will have to wait until your (and your partner’s) savings drop below £16,000 before you can make a claim.

If you have savings between £6,000 and £16,000, you will get a reduced amount of Universal Credit.

If you have paid Class 1 National Insurance contributions

If you were working as an employee during the past two to three years and paid enough Class-1 National Insurance or received National Insurance credits, you may be able to apply for new-style Jobseeker’s Allowance. You will also be able to make a claim for Universal Credit to help with the costs of housing, caring responsibilities or bringing up children if you have household savings of less than £16,000.

If you are not entitled to claim new-style Jobseeker’s Allowance (JSA) and have savings of less than £16,000, you will be able to make a claim for Universal Credit straightaway.

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If you work in the gig economy

Unless it has been agreed as part of your contract, you will not be entitled to Statutory Sick Pay, sick leave or paid holiday leave.

Some employers have said they will offer sick pay if you have to self isolate because of coronavirus. Others have said they might offer some kind of compensation if you have been diagnosed with coronavirus.

If you’re working in the gig economy, check with the company to find out what your rights are.

You will be able to claim sickness benefits available for self-employed people if you’re eligible.

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Coronavirus help if you run your own business

The government has said it will fund the costs of Statutory Sick Pay (SSP) for up to 14 days, employers with workforces of 250 people or fewer.

You can also apply to HMRC for a grant to cover up to 80 percent of your employees’ salaries, up to £2,500 a month.

The government has announced grants and Business Rates support for small and medium-sized business.

Banks will also be offering loans to small and medium sized businesses under the governments Coronavirus Business Interruption Loan scheme.

Small businesses can access loans of between £2,000 and £50,000 through the Bounce Back Loan Scheme. These are interest free for 12 months and no repayments will be due during this time.

If you have taken out a Bounce Back Loan you now have more options for repaying it under the Pay as You Grow scheme. You can apply to:

  • extend the length of the loan term from six to ten years, which could cut monthly repayments by nearly half
  • make interest-only payments for up to six months

Restart Grants of up to £18,000 will be made available to businesses in the hospitality, personal care and leisure industry in England.

The Recovery Loan Scheme will offer loans of between £25,000 and £10 million to help businesses across the UK.

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There is some additional support available if you’re in Wales, Scotland and Northern Ireland.

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HMRC has expanded its Time to Pay Scheme if you are struggling financially because of anything to do with coronavirus and you owe tax.

If you already have missed a payment or are worried you will miss your next payment, call the HMRC Time to Pay helpline on 0800 015 9559.

If you’re business is struggling from the effect of coronavirus, you can call Business Debtline on 0800 197 6026.

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If your business is forced to close because of coronavirus restrictions

If your business is forced to shut because of local or national coronavirus restrictions, you might be able to claim a grant to cover fixed costs, such as rent for your business premises.

Small businesses with a rateable value of £15,000 or less can claim £1,300 a month.

Medium-sized businesses with a rateable value of between £15,000 and £51,000 can claim £2,000 a month.

Large businesses with a rateable value of more than £51,000 can claim £3,000 a month.

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