According to the Institute of Fiscal Studies, almost half of the self-employed will see their family income fall by at least 40% in the short run if work dries up. So just what measures has the Government put in place to protect self-employed workers? And how accessible is financial support?
Who are self-employed workers?
Being self-employed means you work for yourself as a freelance or you are the owner of a business instead of working for a specific employer. You might work for one or several companies or clients and are responsible for finding and agreeing to the work you take on. From managing consultants to magicians, graphic designers to gym instructors, the list of jobs that can be done on a self-employed basis is endless.
There are many advantages to being your own boss. The Self-Employment Review commissioned by the Government found that the perks include higher levels of flexibility, job satisfaction and improved work/life balance. However, the study also revealed that self-employed workers miss regular income (12%), job security (10%) and benefits such as sick pay, holiday leave and an employee pension (9%).
Self-employed workers amidst Covid-19 crisis
At times of crisis, such as the Covid-19 pandemic, self-employed workers feel the economic fallout acutely. The Government announcement on March 20 of an employee job retention scheme failed to address the needs of the self-employed and did nothing to quell their fears. Chancellor Rishi Sunak responded six days later with a £10 billion Covid-19 package for the self-employed. “This is open to people across the UK for at least three months and I’ll extend it for longer if necessary,” he said in his speech.
Below, our experts explain the Self-Employment Income Support Scheme (SEISS), a programme specific to helping freelancers through the Covid-19 crisis, and other benefits available in various scenarios.
1. I have lost all my work. What support is there for me?
“We are covering the same amount of income for the self-employed as for furloughed employees,” said Chancellor Sunak when he announced the SEISS. However, there are strict criteria to meet, explains Melissa Chuttur, an employment lawyer at Slater and Gordon. “If you are self-employed and have lost some or all of your work, the Government may cover up to 80% of your earnings,” she said. “Payment is limited to £2,500 per month and based on your average self-employed income for the past three years.”
The following must be applicable to you, in order to gain access to this government scheme:
- You started your business before April 2019.
- You filed a tax return for 2018-2019.
- You make up to £50,000 in trading profits.
- You intend to continue to trade in the tax year 2020-2021.
- You have lost profits due to Covid-19.
- At least half your income comes from self-employment.
If you’re eligible, HM Revenue and Customs (HMRC) will contact you, but the problem is, there’s going to be a delay. “The Self-Employed Income Support Scheme will become available from June 2020 and backdated to the start of March 2020. Currently it will only cover three months, but this could be extended,” said Chuttur.
Chancellor Sunak claims that “95% of people who are majority self-employed will benefit from this scheme”, but there seem to be an awful lot of caveats. Some people won’t tick all the boxes, says Chuttur. For example,“Many people who became self-employed after April 2019, did not submit their tax return for 2018-2019, or who have profits over £50,000, are not currently eligible… so it’s not entirely clear how the method of calculation would be applied to them.”
Do you have insurance?
Check whether you have insurance policies that would cover your mortgage payments or replace some of your income. For example:
- Critical illness insurance
- Income protection insurance
- Payment protection insurance
- Mortgage payment protection insurance
- Accident, sickness and unemployment insurance