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- Coronavirus: what IPSE is doing and advice for freelancers and the self-employed
Coronavirus: what IPSE is doing and advice for freelancers and the self-employed
- 11 Jun 2020
Updated 6 July
Given that there are now more than five million self-employed people in the UK, accounting for over 15% of the workforce, we have been campaigning to make sure the government does not treat this group as an afterthought in its preparations and public communications in its response to the coronavirus.
In the daily 5pm briefing on the 26th March, the Chancellor announced that the government will pay self-employed people who have been adversely affected by Coronavirus a taxable grant worth 80% of their average monthly profits over the last three years, up to £2500 a month. However, it does not include all self-employed people and IPSE are continuning to engage with the government on the support for those who miss out.
The Self-Employment Income Support Scheme (SEISS) is now open for applications. On May 29, the Chancellor also confirmed it would be extended for a further three months. For more details on these measures, visit our comprehensive FAQs page.
More information on what support is available to the self employed can be found there as well, or by clicking through the drop downs below.
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.
IPSE 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 and raised two principal concerns. First, despite the publication of the government’s advice for employers and businesses there has been no such dedicated guidance for freelancers or clients. Second, we raised the problem that while employees can be guaranteed sick pay when they self-isolate or if their office closes, freelancers and the self-employed do not have the same security and risk losing income.
In our letter we set out two recommendations for government:
- Publish specific guidance for the self-employed that provides information on the infection, how they can certify absence from work to clients, advice on coming into workplaces and support available to them
- Introduce an income protection fund available for self-employed people who are affected by the coronavirus to cover loss of income
We issued a press release on 4th March highlighting our call for an emergency fund for the self-employed and have since worked with other organisations to launch a successful petition on this (more information below). We have 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 as well. The issue also received considerable attention in parliament.
IPSE also gave evidence to the BEIS Select Committee on 17 March to highlight our concerns that government was not doing enough for the self-employed, and called for a Temporary Income Protection Fund to help freelancers' through the crisis. You can watch that session here.
IPSE has 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.
The government outlined its initial response to the challenges posed by COVID-19 in its Budget on March 11. Since then, the Chancellor has provided further statements on how the government intends to support businesses and workers. Visit our FAQ page for a comprehensive overview. Key measures announced to help freelancers included:
- A Self-Employment Income Support Scheme is a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for 3 months (March-May) – it is available for sole traders and members of partnership but there is additional eligibility criteria to look out depending on your trading history; the SEISS has been extended for a further three-month period up to August 2020 for people to claim a second grant, which will be worth 70% of your trading profits.
- 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.
- The next self-assessment payments will be deferred until January 2021.
- Introducing ‘Time to Pay’ arrangements - a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back – for businesses and self-employed individuals in financial distress and with outstanding tax
- HMRC has set up a dedicated COVID-19 helpline (0800 024 1222) to help those in need, and they may be able to agree a bespoke Time to Pay arrangement. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.
- 100%-government backed 'Bounce Back Loans' offer lending facilities for self-employed people and small businesses between £2,000 and £50,000.
- A new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending (loans of up to £1.2 million) and overdrafts. The government will provide lenders with a guarantee of 80% on each loan.
- The proposed rollout of IR35 to the private sector in April has been postponed for one year as a result of COVID-19.
- Directors of a Limited Company (including those providing services through a Personal Service Company) may be eligible for the government Job Retention Scheme and claim 80% of their PAYE salary up to £2,500 a month - however this does not cover income from dividends.
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 also 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 are already seeing a 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.
- 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 have 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. Links are included in the Sources section below.
- Look at your finance options with your bank. The government and the Bank of England have annouced 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 flexiblity 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 believes that this is not just a health crisis but an income crisis too for self-employed people up and down the country. That is why we 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.
With over 160,000 signatures on this petition and through discussions with the Chancellor, we helped shape the Self-Employment Income Support Scheme (Gov.UK) announced by the Chancellor on 26th March. Thank you to everyone who lent their voice to this call and signed the petition. We are still engaging with government on support for those who are not included in the SEISS.
IPSE will continue to monitor this situation closely and post any updates for members and the wider self-employed community on this page.
COVID-19: support for businesses (Gov.UK)
Small Business Commissioner for advice on unpaid invoices and cash flow
Coronavirus Business Interruption Loan Scheme (CBILS) via the British Business Bank
Self-employment and Universal Credit (Gov.UK)
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)
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.