Are self-employed individuals entitled to sick pay?
Generally, employees are entitled to sick pay while self-employed individuals are not. This is because sick pay is paid by an employer. However, the Government has announced assistance for self-employed individuals affected by Covid-19, through the Self-Employment Income Support Scheme.
What is the Self-Employment Income Support Scheme?
This scheme allows self-employed individuals to claim a grant for a percentage of their profits (paid in one lump sum) for the next three months, capped at a specified amount. To be able to apply for grants 4 and 5 of this scheme, you must be self-employed or a member of a partnership and you:
- must have traded in 2019 and 2020
must have submitted your Income Tax Self Assessment by 2 March 2021
are trading when you apply (or would be, if not for COVID-19)
intend to continue trading
have lost trading/partnership trading profit due to COVID-19
In addition, more than half of your income must be through self-employment and your profits from this self-employment must be less than £50,000 per year. Eligibility will be based on your 2019-2020 Self Assessment Tax Return.
Where you are not eligible for the SEISS based on your 2019-2020 Self Assessment Tax Return, the government will consider tax years 2016-2017, 2017-2018, 2018-2019 and 2019-2020.
Initially, the scheme allowed self-employed individuals to claim a grant for 80% of the average profits from the previous three tax years (where applicable) for the next three months, capped at £7,500 (ie £2,500 per month). This grant was paid directly into your bank account in one lump sum.
Where you had not yet returned your Self Assessment tax return for the tax year 2018 - 2019, you had until April 23 2020 to do so.
You could apply to the scheme using the Government’s portal until 13 July 2020.
The Self-Employment Income Support Scheme was extended by the Government. Those eligible were able to make a claim for a second grant in August 2020.
The eligibility requirements for the second grant were the same as outlined above. However, this grant allowed self-employed individuals to claim 70% of their profits (paid in one lump sum) for another three months, capped at £6,570. You could apply for the second grant online until 19 October 2020.
On the 24 September 2020, the Self-Employment Income Support Scheme was again extended by the Government. Those eligible will be able to make a claim for a further three-month grant in November 2020.
The eligibility requirements for the third grant are the same as outlined above. However, this grant allows self-employed individuals to claim 80% of their profits for another three months, capped at £7,500 in total. This will be paid in one lump sum. You could apply for the third grant online until 29 January 2021.
The Government has the discretion to further extend the Self-Employment Income Support Scheme.
For more information read the Government’s guidance, Self-Employment Income Support Scheme Grant Extension.
This grant will cover February to April 2021 and the eligibility requirements for the fourth grant will be the same as the third grant. Self-employed individuals will be able to claim 80% of their profits during these three months, capped at £2,500. This will be paid in one lump sum.
You will be able to apply online for this grant from late April 2021. More information is expected in due course.
This grant will cover May to September and the amount available will be determined by a ‘turnover test.’ Individuals claiming the fifth grant whose turnover has fallen by 30% or more will receive 80% of three months average trading profits, capped at £7,500. Those whose turnover has fallen by less than 30% will only be eligible for 30% of three months average trading profits, capped at £2,850.
You will be able to apply online for this grant from late July 2021. More information is expected in due course.
What if I’m self employed and require urgent financial assistance?
The Government has made it easier for individuals affected by Covid-19 to access benefits. Those individuals on Employment and Support Allowance (ESA) who are suffering from Covid-19 or are required to self-isolate, will be able to claim the allowance from day one, instead of having to wait for seven days.
Further, the minimum income floor has been temporarily removed from Universal Credit for self-employed individuals who have to self-isolate as a result of coronavirus. The minimum income floor is an assumed level of income, which takes into account how much an individual would normally be expected to earn in a month, when calculating their entitlement to Universal Credit. Not having this minimum income floor in place, means that self-employed individuals will be able to claim for time they spend off work due to sickness.
Self-employed individuals in need of financial assistance will be able to apply for Universal Credit over the phone, without the need of attending a jobcentre.
Self-employed individuals who do not have enough money to live on while they wait for their first Universal Credit payment, can ask for an advance payment. This can be done online or through their Jobcentre Plus work coach. To apply, individuals will need to:
explain why they need an advance
verify their identity (either when they apply online or during their first phone appointment with their work coach)
provide bank account details for the advance
For more guidance visit the Government website.
I’m struggling to meet my Self-Assessment payments on account. Is help available?
If you’re due to pay a self-assessment payment on account by 31 July 2020 but won't be able to make the payment by that date due to Covid-19, then you may defer payment until January 2021. As of 24 September, this period has been extended by the Government. Those due to pay up to £30,000 in tax by 31 January 2021 will be able to use HMRC's 'Time to Pay' service to pay over an additional 12 months, meaning they won't need to pay in full until January 2022.
To defer these payments, you don't need to make an application.
During the deferral period, you can set up a budget payment plan to help you pay the deferred payment on account when it comes due. You can set up a payment plan by either setting one up online (via the GOV.UK website) or calling the Payment Support Service:
Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm
I’m struggling to pay tax because of Covid-19. Is help available?
If you are struggling to pay VAT because of Coronavirus (COVID-19), you can defer VAT payments due before 30 June 2020 until 31 March 2021. If you choose to defer your VAT payment as a result of Coronavirus, you must pay the VAT due on or before 31 March 2021. You do not need to tell HMRC that you’re deferring your VAT payment. For more information read GOV.UK on Deferral of VAT payments.
If you deferred VAT payments between 20 March and 30 June 2020 and still have payments to make, you may also join the VAT deferral new payment scheme (open from 23 February including 21 June 2021).
This scheme allows you to:
pay your deferred VAT in equal interest-free instalments
choose the number of instalments, from 2 to 11 (depending on when you join)
For more information on how to join, read GOV.UK on Join the VAT deferral new payment scheme.
All self-employed people in financial distress and with outstanding tax liabilities may also be eligible to receive support with their tax affairs through HMRC's Time to Pay Service. Support is arranged on a case-by-case basis and is tailored to individual circumstances. If you have missed a tax payment or you might miss your next payment due to Coronavirus (COVID-19), you can call HMRC's dedicated helpline: 0800 024 1222. If you're worried about a future payment, you can call HMRC nearer the time. For more information read GOV.UK on If you cannot pay your tax bill on time.