Few people have escaped the impact of Covid-19 since the coronavirus SARS-CoV2 began spreading worldwide in 2020. The self-employed faced specific challenges, with IPSE at the forefront of calls for better funding and support, highlighting gaps in the schemes introduced by the UK government.
Freelancers and business owners saw average earnings drop, and a significant drop in their mental wellbeing alongside physical issues caused directly by Covid-19. Measures included by the government included the Self-Employment Income Support Scheme (SEISS), Bounce Back Loans, postponing changes to IR35 regulations, and relaxing the eligibility criteria for Universal Credit.
Gaps in support and a fall in income led to a fall in the number of self-employed in the UK, and a large increase in business closures. With a significant number of people choosing self-employment to manage physical and mental health challenges, the impact of Covid has continued to be felt more keenly in the sector, especially as health measures and financial support have ended. The risk of Covid and other airborne infections continues to be a concern for many people five years after the initial outbreak of coronavirus.
Due to devolution, support for those in Scotland, Wales and Northern Ireland varied from the UK government provisions.
The Self-Employment Income Support Scheme (SEISS)
First announced on March 26th, 2020, the Self-Employment Income Support Scheme was designed to support the self-employed and members of partnerships adversely affected by Covid with taxable grants based on a percentage of average trading profits.
A total of five grants were issued until the scheme closed in September 2021. To be eligible, you need to have filed a tax return for self-employed earnings in 2019/2020, with at least 50% of your income resulting from self-employment, and showing an annual average trading profit of £50,000 or less.
Unfortunately this left many self-employed people ineligible, with IPSE repeatedly calling for improvements to the SEISS scheme to fix the “devastating gaps” in the support available
While SEISS grants were taxable, there was no need to pay them back. Issues included the lack of support for the newly self-employed, or for those whose business was not in profit at the time. Receiving a grant could also cause issues for those applying for a mortgage or remortgaging, depending on the lender.
Bounce Back Loans (BBLs)
The Bounce Back Loan (BBL) schemes were introduced for limited company directors and small businesses which needed access to funding due to the initial impact of the Covid-19 pandemic.
These loans were 100% state-backed, with no interest charged or repayments required for the first 12 months. The amount available was between £2,000 and £50,000, capped at 25% of your annual turnover. They were available from 2020, and applications closed in March 2021.
Initially the loans were for a six-year term, but this was later extended to 10 years, with a fixed interest rate of 2.5% annual interest. This means many self-employed businesses will still be repaying loans potentially until 2031.
If you’re concerned about your repayments, there is the option to take one six-month repayment holiday during the loan term. You’re also able to reduce payments for six months by paying interest only for that period, which is available up to three times during the term of your loan.
But this might not have been enough, particularly for the newly self-employed, and IPSE has warned of a rising tide of debt in the self-employed sector, both due BBLs, and those ineligible forced to track on traditional forms of borrowing. Our research showed one million UK freelancers were pushed into debt by the middle of May 2021, with an increase in late payments putting additional pressure on the self-employed. If you’re struggling to manage personal debts, we have a guide on ways to improve your situation, along with other financial advice for you and your business.
Bounce back loans didn’t impact eligibility for other personal support, or on your personal credit report. Loans can also be repaid early without penalty. There were no restrictions on what the loan could be used for, including paying off existing finance at a high APR rate.
And as an unsecured loan backed by the state, the terms mean no recovery action could be taken over a principal private residence or a primary personal vehicle.
A growth in remote and hybrid working
Despite pushback from some in business and government, the pandemic and lockdowns resulted in a large growth and acceptance of remote and hybrid working arrangements. IPSE research revealed 90% of freelancers worked remotely in 2020, with benefits including a better work-life balance, reducing travel, and more flexibility around schedules. 85% of UK disabled workers reported they were more productive when working from home.
While working entirely from home has fallen since 2021, more than a quarter of working adults in Great Britain are now hybrid working (ONS figures, Autumn 2024). The percentage is higher for workers over 30, who are more likely to be both parents and in managerial roles. It’s also higher in sectors such as IT, and for those with higher qualifications.
There’s been high profile push back from some government members and business leaders, but on the whole it’s led to a growing acceptance of alternative and more flexible ways of working, which benefits freelancers and the self-employed who may choose to prioritise working from home or their own office whenever possible.
Taking continued Covid-19 precautions
Many people continue to take precautions to reduce their exposure to Covid-19 and other airborne infections, particularly in higher risk settings such as hospitals. In addition to the immediate symptoms, long-term effects include long Covid, and growing evidence of damage to the brain, cardio-vascular system, lungs and elsewhere.
The Covid-19 vaccine can reduce severe symptoms, and a decreasing number of people are eligible for free vaccination via the NHS. Alternatively, you’re able to pay for a private vaccination via various pharmacies and providers.
Wearing a face mask (particularly those certified to N95/FFP3 levels) is proven to reduce the risk of transmission and infection in public spaces. Other measures include increasing ventilation by opening windows to increase airflow, or using a HEPA air filter available as a portable unit for personal use, or in larger sizes to capture air particles in larger rooms. It’s also possible to build your own using air filters and a fan.
Meeting clients outside (UK weather permitting) can substantially reduce the risk, it is still possible to catch Covid and other airborne infections outside, particularly in more crowded settings.
With freelancing and self-employment benefitting many people with disabilities and chronic health conditions, which may not be visible, it’s a good idea to be sensitive to any precautions being taken, whatever personal choices you’ve made for yourself.
How IPSE can help you
IPSE has continually campaigned and spoken with the government on behalf of the whole self-employed sector, including pushing for greater support during the pandemic. Becoming a member helps to make our voice more powerful, but there are also other benefits which could help you.
We hold a range of events including training and networking, with the majority hosted online, and available through our on-demand library of past webinars, allowing you to learn and meet other self-employed professionals without needing to attend in-person.
You can also book a Success Session with an expert of your choice to discuss any specific challenges you’re encountering, find collaborators through the IPSE Member Directory, get emotional help through the Member Support programme and connect with other IPSE members professionally and socially in the UK’s largest community of freelancers and the self-employed.
Need more advice?
Whether you’re running your own business on a full or part-time basis, any changes to the UK tax system can have a major impact on your livelihood, so stay up-to-...
A drop in income is often a major worry for expectant parents, especially if you’re self-employed. Understanding what you can claim, and preparing as early as pos...
Feeling overwhelmed by self-employment chaos? Discover time management tips that boost freedom, reduce stress, and help you reclaim control of your work-life bala...
