Coronavirus: Advice for the self-employed and freelancers
- 5 Nov 2020
Updated 5 November
The self-employed and coronavirus
IPSE has been campaigning to make sure the government does not treat the self-employed, who account for 15% of the UK workforce, as an afterthought in its preparations, public communications and support in its response to the coronavirus.
Over the last nine months, we have been leading the campaign to raise awareness about the impact the crisis is having on the self-employed, and the need for government to provide them with the necessary support. We are pleased the government introduced the Self-Employment Income Support Scheme (SEISS) but we are concerned that many have missed out on this support, including the newly self-employed and limited company directors. In addition, with new restrictions in light of increasing cases, there is a need to ensure support for the self-employed is flexible, fair and focused in the coming months.
We have set out detailed information on what support is available for you on our comprehensive FAQs page.
More information on what we are doing to help the self-employed, along with some links to the latest government advice on coronavirus, can be found there and by clicking through the drop down buttons below.
Below we have listed some direct links to the government webpages detailing the various business support schemes that have been announced. However, we would also recommend you look at our comprehensive FAQ page if you have any questions.
COVID-19: support for businesses (Gov.UK)
Bounce Back Loans (Gov.UK)
Coronavirus Business Interruption Loan Scheme (CBILS) via the British Business Bank
Self-employment and Universal Credit (Gov.UK)
Payments for those self-isolating (Gov.UK)
Small Business Commissioner for advice on unpaid invoices and cash flow
Please note the deadline for these funds may have closed, check with the grant providers before making an application.
Arts Council England Emergency Fund (All artists)
Help Musicians Hardship Fund (Musicians)
Musicians Union Hardship Fund (Musicians)
Dance Professionals Fund (Dance)
BFI Film and TV Emergency Relief Fund (Film & TV freelancers and workers)
IPSE will continue to monitor this situation closely and post any updates for members and the wider self-employed community on this page.
Government help for self-employed professionals during coronavirus
The government outlined its initial response to help businesses and the self-employed through the challenges posed by COVID-19 in its Budget on March 11 but the situation has developed rapidly and extensively since then.
Key measures announced to help freelancers include:
SEISS grant extension and increase in amount available
The government has extended the Self-Employment Income Support Scheme for two further periods and has increased the amount available in light of the new national lockdown. This will be a taxable grant worth 80% of past average monthly trading profits up to a maximum of £7,500 for 3 months (November to January). Eligibility is the same as the previous SEISS grant - available for sole traders and partnerships. A fourth grant will be available February to April 2021, the amounts available will be kept under review by the Treasury.
Job Retention Scheme and Job Support Scheme
Due to the recent increase in cases, the government has decided to reinstate the original 'furlough' (Job Retention) scheme and extend this until March. This extended Job Retention Scheme will operate as the previous scheme did and will be open to limited company directors. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work. The Job Support Scheme, which was due to have a mix of employer and government contribution, will be introduced following the end of the CJRS.
Business support grants
Additional funding has been announced to support cash grants primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. This will be delivered by local authorities and the devolved administrations.
HMRC helpline for self-employed professionals
HMRC's self-employed helpline for COVID-19 support (0800 024 1222) has been set up to help those in need, and they may be able to agree a bespoke Time to Pay arrangement (more details on this below). HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.
Other key measures:
VAT deferral - If you deferred your VAT payments due between March and June, you can now organise to pay these over 11 equal payments in 2021-22. All VAT paying businesses are eligible, but the new system will be opt-in and set up in early 2021.
- The Minimum Income Floor in Universal Credit will be suspended 'for everyone affected by the economic impacts of coronavirus'. This means that self-employed people can now access Universal Credit at a rate equivalent to Statutory Sick Pay for employees (approximately £94.25 per week).
- ‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day.
- People will be able to claim UC and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre.
Delayed self-assessment payments can now be paid back over an 11 month interest free period for those owing up to £30,000, which can be organised through the 'Time to Pay' facility.
100%-government backed 'Bounce Back Loans' offer lending facilities for self-employed people and small businesses between £2,000 and £50,000. Applications will close at the end of November.
The proposed rollout of IR35 to the private sector in April has been postponed for one year as a result of COVID-19 but government has passed legislation that mandates the changes will still come into effect.
From 25 March 2020, companies can apply online for a three-month extension for filing their accounts to Companies House. The Government has also said that it will temporarily suspend the wrongful trading rules to help company directors continue to trade during the coronavirus period.
IPSE has welcomed these measures but we remain concerned that some self-employed may fall through the gaps in the government's response. We are continuing to seek clarity from government and we will update this page to keep members notified of any further policy changes if they happen.
We are not in a position to make detailed recommendations to either freelancers or clients about how to run their businesses, or the steps they should take to either mitigate any risk of infection or agree contingency plans for work. We have listed several authoritative sources below that provide guidance on the virus and we advise our members, self-employed people and companies to follow the official advice closely.
However, we are aware that many freelancers and self-employed people have seen a significant financial impact on their businesses. While everyone's individual situation will be different we would broadly recommend the following actions:
- Discuss your situation, including current and future contracts, with your clients. Clients that rely on the flexibility of freelancers should recognise that this can often mean the self-employed are in a more precarious position if they need to self-isolate or lose work as a result of a wider economic slowdown. We would hope that clients engage constructively with these workers to put appropriate arrangements in place to minimise health risks and financial disruption. This means engaging flexibly on contracts - not terminating them at short notice - and being flexible where possible in requiring contractors to return to work sites.
- One vital aspect you will want to speak with your clients about is on payment terms and ensuring you are paid promptly for work. Cash flow is crucial and there should be no excuses from clients, big or small, for not paying you on time or even negotiating in good faith to come to paying invoices immediately up-front or in instalments depending on your needs. For further help on this, you can contact the Small Business Commissioner's office (below).
- IPSE has discussed some of the government's support measures for the self-employed above. Assess what options might be available through government support. You can talk to government agencies and the devolved governments about the support options available in terms of the welfare system, emergency loans and wider support such as mortgage holidays. As well as the financial support schemes, lower income workers can also receive money if they are ill or self-isolating. Links are included in the Sources section below.
- Look at your finance options with your bank. The government and the Bank of England have announced several measures intended to support the financial services and banking industries so that they can offer new overdraft facilities and be more lenient on loan repayments. We would hope that flexibility is the watchword - we have included links to different banks' sites at the bottom of this article.
- Consider how the coronavirus may affect your contractual obligations, for instance checking whether you have 'force majeure' clauses in place and whether they would in any case be covered during this crisis. Similarly, you may also wish to check what health or income protection insurance they have in place. There are a number of options available if you are not currently covered however we would caution that these policies often have a deferral period of three to four weeks and may not provide appropriate cover if you are forced to self-isolate, so it is vital you are aware of the T&Cs before making any decision.
IPSE recognises this is not just a health crisis but an economic crisis - and we have been campaigning hard for government to give more support to the self-employed. Here is a timeline of our campaigning activity - jump to the end to find out what we're currently doing to ensure your voice is heard.
To get involved and help amplify our voice, you can help support us by joining now.
IPSE first wrote a letter (available to view here) to the Secretary of State for Health, Matt Hancock, and the Secretary of State for Work & Pensions, Therese Coffey, on 27th February on the issue to raise our concerns about a lack of guidance for the self-employed and the risk to their incomes that COVID-19 would pose. In our letter we set out two recommendations for government: publish specific guidance for the self-employed and introduce an income protection fund for those affected by the coronavirus to cover loss of income.
IPSE teamed up with the Creative Industries Federation and dozens of other groups to write an open letter to the Prime Minister asking the government to create a Temporary Income Protection Fund to support self-employed people through the coming months, to keep their businesses alive and help them meet their basic living costs. We organised a successful petition signed by over 200,000 people on this. We made several media appearances on the BBC, Sky News, LBC and in print to highlight the need for the government to consider the self-employed. The issue also received considerable attention in parliament and IPSE gave evidence to the BEIS Select Committee on 17 March to highlight our concerns. You can watch that session here.
Following our pressure, IPSE welcomed the government’s announcement on 26th March of a “historic lifeline” of financial support for the UK’s self-employed in the form of the SEISS. These measures guarantee self-employed people who work as sole traders, and earn up to £50,000, 80 per cent of their income. This will be based on their previous tax return(s). The Chancellor announced on May 29 that the scheme would be extended for a further three-month period, with a second grant able to be claimed in August 2020.
While the package will provide essential support for many self-employed people, IPSE has pledged to keep working with the government to ensure all freelancers in need are supported during the Coronavirus outbreak. We are continuing to highlight to government the need for further support for those groups who missed out, including limited company directors and the newly self-employed.
IPSE stepped up our campaign calling for the government to find ways to include those self-employed workers who missed out on SEISS to be brought into the available support schemes. We gave evidence to the Treasury Select Committee on our proposal for a 'pay now, claw back later' model to include dividend income in the government schemes to help and were heartened to learn that the government's Small Business Minister was considering further support. IPSE also published a new report featuring a survey of freelancers highlighting the economic impact the crisis was having.
The month began with welcome news that the SEISS was open for applications. However, we continued to express concern that several groups had been excluded from support - and there was mounting uncertainty that SEISS would not be extended or significantly reduced.
We called for SEISS to be extended for a second time, rallying support from the Creative Industries Federation, BECTU, and Equity - we were pleased that government heeded our call and said the scheme would continue until August. We were also joined on one of our weekly webinars by Small Business Minister Paul Scully MP, who fielded questions from IPSE members on the government's approach.
Another busy month saw us welcome a report from the Treasury Select Committee backing our call to extend government support to company directors, through the adoption of our 'pay now, claw back later' model. It was also announced that SEISS would have increased flexiblity for self-employed veterans and parents to access the scheme.
The government responded to the Treasury Select Committee's report calling for additional support for company directors. Disappointingly, the Treasury said extending support to this group would be too “resource intensive”, a position IPSE strongly disagree with. Meanwhile, the number of self-employed claiming the SEISS rose to over 2.5 million, highlighting the desperate need that existed for the scheme.
We published our latest Confidence Index, highlighting the devastating impact the crisis was having on freelance incomes - which fell by 25% in Q2. IPSE Policy Director also gave evidence to the London Assembly on the need to support freelancers in the capital.
The second SEISS grant opened for applications, however we continued to raise the issue of those who missed out on the support scheme altogether. We urged the government to be ready to re-open and expand support.
As coronavirus cases rise again, there is increasing concern about additional restrictions being reimposed that may hit the economy and self-employed in particular. We also produced new report on the mental health impact of the crisis on freelancers.
The Chancellor announced a new Winter Economy Plan, opting to publish this instead of the traditional Autumn Budget which has been postponed. The Plan confirmed that SEISS would be extended for two further grants, lasting for six months from November 2020 to April 2021, at a lower rate of 20% of average trading profits. Other measures included an extension of the deadline to apply for a Bounce Back Loan and an easing of the reapyment period, and further assistance with tax and VAT repayment.
Despite the SEISS extension, IPSE has criticsed the package as "woefully inadequate" in terms of the support offered to the self-employed and raised concern that those who have gone without support, such as company directors and the newly self-employed, continue to fall through the cracks.
With cases accelerating, the Chancellor has revised his Winter Economy Plan. In particular he has made adjustments to the Job Support Scheme to make it more generous for employers and employees, and also doubled the amount available through the third SEISS grant from 20% to 40% of past average monthly profits. IPSE welcomed the increase but has warned that structural problems remain with SEISS.
The Prime Minister has announced a second England-wide lockdown. The original 'furlough' scheme will be reinstated, with the introduction of the Job Support Scheme now postponed. We are awaiting confirmation of the amount that will be available to the self-employed through SEISS.
To get involved and help amplify our voice, you can help support us by joining now.
Meet the author
Policy Development Manager
For more information about how COVID-19 is affecting the self-employed, visit our Coronavirus hub
We're constantly updating our list of commonly asked questions from freelancers and the self-employed to reflect the latest government policy and advice.