Self-employment and coronavirus

A lot of self-employed people have been impacted by the COVID-19 pandemic. Read on to see what help is available.

A lot of self-employed people have been impacted by the COVID-19 pandemic. Read on to see what help is available.

Emily Kindness
From the Business team
7
minute read
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Posted 8 APRIL 2021

What are my rights if I’m self-employed?

Whether you can continue business as usual will depend on what you do and where in the UK you live. The government imposed a new national lockdown in England on 5 January and has set out a list of which types of businesses must shut and those that can remain open.

For example, restaurants must shut, but they can instead offer takeaway and delivery. Garages, hardware shops, vets and vehicle-rental services are among the essential businesses that can stay open, while hairdressers, gyms and market stalls selling things other than essentials, like food and drink, must close. Northern Ireland, Scotland and Wales have their own rules. 
 
See restrictions for England 

See restrictions for Northern Ireland
 
See restrictions for Scotland
 
See restrictions for Wales

Please note: The information in this article was correct at the time of publication on 8 April 2021, but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with your insurance provider or potential provider directly to confirm any details. 

What if my work is carried out in other people’s homes?

If your work is essential and carried out in people’s homes, such as doing crucial repairs and maintenance, you can continue, provided you’re well and have no COVID-19 symptoms.
 
You’ll need to make sure you follow public-health guidelines, including maintaining a two-metre distance from anyone in the property, to make sure everyone remains safe.

You mustn’t work in any household that is isolating, or where a person is being shielded, unless you’re asked to put right something that’s a direct risk to the safety of the household, such as emergency plumbing or repairs. If you have to do this, you can get help from Public Health England about how to work safely.

What should I do if I’ve lost income because of coronavirus?

If you're self-employed or a member of a partnership and have lost income due to coronavirus, you may be able to apply to the government’s Self-Employment Income Support Scheme (SEISS).
 
You can also apply for Universal Credit if you’re currently facing financial difficulties.
 
You may also be eligible for some of the other government schemes aimed at small businesses. 

What is the government doing to help the self-employed?

The government is offering help to the self-employed in a variety of ways, depending on what you’re eligible for and what your circumstances are.

The coronavirus Self-Employment Income Support Scheme is the main scheme to help the self-employed. Applications for the fourth grant offered under the scheme are open from late April 2021 until 31 May 2021. The scheme will allow you to claim a taxable grant worth 80% of what your average trading profits for three months would be, up to a total of £7,500 paid in a single instalment. 

A further phase of the scheme, covering May to September 2021, was announced in the Budget. Applications for this fifth grant are open from late July. How much you can claim depends on how much your turnover was reduced in the year April 2020 to April 2021.

  • For a turnover reduction of 30% or more – 80% of three months’ average trading profits, capped at £7,500
  • For a turnover reduction of less than 30% – three months’ average trading profits, capped at £2,850

You might also be eligible for rate relief, business interruption loans, deferral of tax payments, grants and Universal Credit.

 

Who is eligible for the Self-Employment Income Support scheme?

To be eligible for the extension of the scheme, you must have traded in both tax years:

  • 2019 to 2020 and submitted your Self Assessment tax return by 2 March 2021
  • 2020 to 2021

You need to declare that you intend to continue to trade and are either: 

  • Currently trading but are impacted by reduced demand because of coronavirus;
  • Previously trading but temporarily unable to do so because of coronavirus  

Online applications for the scheme will open in late April 2021. 

You’ll only be able to access the scheme through the government website. If you get emails or messages claiming to be from HMRC that ask you to click on a link or to give information like your name, credit card or bank details, it’s a scam.

See how to avoid coronavirus scams

See how to avoid coronavirus scams

Can the self-employed apply for other help for small businesses?

Yes, you might be able to benefit from several schemes designed to help small businesses, for example:

  • The Bounce Back Loan Scheme (BBLS) helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. Loan applications were open until 31 March 20201.

  • The Recovery Loan Scheme, aimed at helping businesses recover and grow following the pandemic, will replace BBLS. It will run from 6 April.

  • Business rates relief

  • The Time to Pay scheme, which could allow you to pay your Self Assessment tax in monthly instalments if you can’t pay because of coronavirus.

  • Restart grants for high street businesses.

  • Increased amounts of Universal Credit

  • If you’re a director of your own company and paid through PAYE, you may be able to get support using the Job Retention Scheme, by putting yourself on furlough. Technically, if you’re furloughed, you can't then work for the firm, but you can continue to perform statutory obligations as a director. For example, official legal filings.

If you deferred your VAT payment due from 20 March to 30 June 2020, you now have the option to make smaller payments up to the end of March 2022, interest free. 
 
See more on deferral of VAT payments on GOV.UK 

What other help is available?

It’s worth looking at any business insurance policies to see if you have any business interruption cover or loss of earnings cover that could help.

You could have applied to the Business Interruption Loan Scheme, which supports small to medium-sized businesses (SMEs) with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. The scheme was open until 31 March 2021.
  
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website. 
 
You can also apply for Universal Credit, if you’re eligible. 

What if I’m not eligible for the Self-Employment Income Support scheme?

If you’ve only been self-employed for a short time, you’re not likely to be accepted for the scheme. In this case, you could see if you can claim on any of your insurance policies, and make the most of the other options available like:

  • Business rates relief
  • The Business Interruption Loan Scheme
  • Increased amounts of Universal Credit

What if I end my self-employment?

Many self-employed people who can’t work are finding ways to tide themselves over, such as working in one of the sectors that is currently over-stretched. Many of the large supermarkets have been taking on additional workers, for example.

What if I can’t work because I am sick or self-isolating?

In this case, you may be able to claim Universal Credit.

If you have income protection insurance and you're ill for an extended period of time, you may be able to make a claim on your policy.

See more on coronavirus and income protection

What protection do I have if I work in the gig economy?

If you’re one of the many people who are on a zero-hours contract, are a freelancer or work through an agency, it's vital to check to know for sure if you’re actually employed or self-employed.

The best way to tell this is to see how you're taxed. If you're taxed through PAYE, then you're considered an employee. So, you should have the same rights as an employee. This means that if you can no longer work you could be entitled to furlough through the Coronavirus Job Retention Scheme, which means the government will pay 80% of your salary up to £2,500 a month.

Coronavirus scams

As a self-employed person you need to be particularly careful as there are lots of criminals trying their luck with scams relating to coronavirus. Ignore emails and calls that promise anything too good to be true and go directly to government sites to apply for benefits, grants and loans.

See how to avoid coronavirus scams

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