As the Covid-19 crisis deepens many of us are worried about our incomes in the weeks ahead. While many employers have been proactive with their teams in sharing information about sick pay, when you’re self employed it’s down to you to find out what the options are. We explore the rights for self employed people during the Coronavirus shutdown and how they can cope if they lose income.
There are around 5 million self employed people in the UK, many of whom have already seen their work impacted by Coronavirus. From hairdressers losing bookings to home-based freelancers seeing their clients reduce commissions, people are being impacted in a wide range of ways.
Plus, of course, there is the uncertainty over what happens if a self-employed worker is in self-isolation or falls ill and can’t work as a result. Employed people have been advised that they will be eligible for statutory sick pay – but this is not available to the self employed. So what should they do?
Some self employed people own income protection insurance policies, which is a form of insurance cover designed to pay out if you’re sick or injured and can’t work. If you have one of these policies, now is the time to claim.
If not, there are still other options open to you. Self employed people don’t receive statutory sick pay, but if you’re unwell or self isolating you may be eligible to claim Employment and Support Allowance (ESA) – now available from day one of sickness instead of day eight. You usually need 2-3 years of National Insurance credits to receive ESA.
Another option is Universal Credit, which you’re eligible for if you live in the UK, are now on a low income or out of work.
The Government is suspending the minimum income floor for everyone affected by the economic impacts of coronavirus. That means every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees. Click here to find out more.
Do bear in mind that some jobs have special self employed rights. So if you work for a business that has told you you’re working as self employed, check your contract or speak to your manager to understand whether you may be eligible for statutory sick pay or any other support.
Various freelance organisations are lobbying the government for more support for freelancers and the self employed in surviving the crisis.
Whether you are able to claim benefits or not, it’s well worth seeking out ways to reduce your spending as the crisis continues. Most banks and building societies have agreed to mortgage payment holidays, which will alleviate the pressure for many of us.
You can also speak to your energy provider or any other business that you make regular payments to and enquire about the options available.
The Government has also announced that the next self-assessment payments will be deferred until January 2021 and that it is deferring the next quarter of VAT payments.
One of the less negative developments coming from Covid-19 is that the ‘off payroll rules’ called IR-35 will no longer be introduced in April 2020. This new legislation was due to make it harder for companies to hire freelancers, interims and contractors, requiring them instead to appoint people as regular employees. There were fears that this move would impact both companies and the self-employed, so is seen by many as positive news, if a little last-minute.
There’s more information on the IR35 news in this article.
This is a complex area and things are changing every day. For more information on Coronavirus and work, read our article ‘Coronavirus – what working parents need to know.’
For more advice on Government support if you are self employed, click here.
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