What support is available for self-employed and freelance workers affected by COVID-19?


What support is available for self-employed and freelance workers affected by COVID-19?

With no concrete endpoint in sight yet, we’re seeing the effects a global pandemic can have on the UK. Due to COVID-19, we’re seeing massive impacts on the economy with businesses struggling, industries falling apart, and individuals struggling to make ends meet.

Following announcements about the government support available to business owners and PAYE staff, self-employed and freelance workers had to wait to see if they would receive similar support. 

In the UK, around 15.3% of the employed population are self-employed – over five million people – making financial support for this subsection of society crucial. And, thankfully, the government has stepped up to do what they can to ease the financial strain.  

Self-employment Income Support Scheme

This scheme is the self-employed version of the Coronavirus Job Retention Scheme. It allows self-employed individuals to claim a taxable grant worth 80% of their trading profits, up to £2,500 a month. At the moment, it’s available for three months, but this may be extended if the crisis evolves past this point.

While the grant is subject to Income Tax and National Insurance contributions, it doesn’t need to be repaid and you can continue to work or volunteer after receiving it. You can claim for Universal Credit while you wait for the grant but it’s worth noting that any grant you receive will contribute to your self-employed income and may affect the credit you’re eligible for.

To be eligible for this grant, you must:

  • Confirm to HMRC that your business has been adversely affected by coronavirus
  • Have submitted a Self Assessment tax return for the 2018/19 year
  • Have traded in the 2019/20 tax year and still be trading other than where the virus has made it impossible
  • Intend to continue trading into the 2020/21 tax year
  • Have trading profits of no more than £50,000 and these should make up more than half your total income for either the 2018/19 tax year or the average of the 2016/17, 2017/18, and 2018/19 tax years

Minimum Income Floor suspension

Before, if your income was below the minimum income floor figure, your benefits were based on this rather than your actual earnings. For now, the Minimum Income Floor has been relaxed for everyone affected by coronavirus. 

This means self-employed people can access Universal Credit at a rate according to their actual earnings, whether this is below or above the minimum income floor. With the need for self-isolation, you don’t necessarily need to go to a Jobcentre to claim benefits.

Payment deferrals

For both self-assessments and VAT payments, optional payment deferrals are there to support those struggling financially through this time. While you should pay as normal if you can, these deferrals offer respite to those most impacted by this crisis. 

Your next self-assessment payments can be pushed back from July 2020 to January 2021. Plus, you can delay any VAT payments due before 30 June 2020 to 31 March 2021.

For self-employed individuals who are significantly impacted and owe outstanding tax, the government has also introduced ‘Time to Pay’ arrangements. These allow a deferral on the repayment of HMRC liabilities and will assign you a pre-agreed time period to pay back what you owe. 

‘New style’ Employment and Support Allowance (ESA)

New Style ESA is available to those with illnesses or have a health condition that limits their ability to work. It’s a fortnightly payment that can be claimed on its own or alongside Universal Credit. To further support those whose health has been directly impacted by COVID-19 or are self-isolating in line with government advice, this allowance will be payable from the first day of sickness as opposed to the regular eighth day. 

Faced with such an unprecedented time, the government is going above and beyond to support the UK’s economy. It took them a little longer, but this support for self-employed people will hopefully ease their worry. There are many schemes in place to support people in different ways. Take some time to look at the options available and see which suits you best. We covered advice for business owners here and you can always find more advice on the government website.

At Big Hand, we’re experts in all things business and finance. The only way we’ll get through this difficult time is by coming together and supporting one another. Whether you want advice, support, or general business guidance, give us a call on 0161 327 2911 today.

About the Author:

Since 2013, Sophie has been an integral part of the Big Hand team. As a social butterfly, Sophie is mostly responsible for introducing new clients to the company. If you’re an avid networking, you’re most likely to meet Sophie at local events. Alongside attracting new business, she also assists with account management, and she manages payroll on behalf of clients. For fun, Sophie loves to keep fit running or playing korfball with her team. She is also in the middle of learning a new language and so her most recent challenge is attempting to read Harry Potter in Dutch.