Coronavirus (COVID-19) has had a huge impact on the UK economy but those who are self-employed have been particularly hard hit
Around 15% of the UK workforce is self-employed and while there are many advantages to self-employment the pandemic has thrown its drawbacks into stark relief. During lockdown those working for themselves didn't have employee benefits, such as sick pay or the furlough scheme, to fall back on and freelancers began to loose opportunities and income as organisations set about cutting costs and terminating freelance contracts.
How has coronavirus impacted the self-employed?
According to an Enterprise Research Center (ERC) report, COVID-19 and self-employment in the UK (April 2020) the self-employed are identified as a 'particularly vulnerable group', and growing numbers of this group are in fact degree holders. For example, in 2016 one third of all self-employed in the UK were graduates.
The Institute of Fiscal Studies has highlighted sectors most directly affected by lockdown restrictions and these include:
- accommodation and food
- arts and leisure
- domestic services
- non-food and non-pharmaceutical retail
- passenger transport
- personal care.
The ERC report concluded that 22% of the self-employed, or 1.1 million, are in sectors most at risk of loss of livelihood in the current crisis. If this happens and the loss was permanent it would effectively wipe out all of the growth in self-employment activity seen across the UK since the onset of the 2008 financial crash.
The report also found that the odds of being at risk of losing one's livelihood is twice as a high if self-employed compared to being in employment.
Luminate's UK graduate labour market update (23 July) by Prospects' head of higher education intelligence, Charlie Ball is slightly more positive. Charlie explains that while things are looking difficult for the self-employed, partly because a lot work in industries that have been badly affected, such as the arts, and partly due to sheer lack of cash reserves, the self-employment sector has in fact been more resilient than first feared.
When trying to gauge the impact of COVID-19 on the self-employed and the self-employment sector as a whole it's still early days.
Is now a good time to go self-employed?
When considering whether now is a good time to become self-employed or freelance, you'll not only need to weigh up the points covered in is self-employment right for you? and the practical aspects outlined in how to start a business, you'll also need to consider the economic impact of COVID-19 on the industry you're thinking of entering into and on the economy as a whole. All sectors have taken a hit to some extent so you’ll need to think about how quickly your industry is predicted to recover.
If you are planning to start a business in these unprecedented times it's more important than ever to conduct extensive research and seek as much professional and personal advice as possible. Speak to those who are already self-employed, especially if they work in the industry you're planning to enter. How have their businesses been affected by COVID-19? Do they expect to recover? What impact has running a business during a pandemic had on their personal lives, or on their finances?
Discover things to avoid when starting a business.
What help is available for the self-employed?
In response to the COVID crisis the government announced a range of measures to support those already self-employed. The Self-Employment Income Support Scheme (SEISS) is a government grant (non-repayable) for self-employed people whose businesses have been adversely affected by COVID-19. Applications for the first grant closed on 13 July but applications for the second opened on 17 August.
The grant is worth up to 70% of your trading profits, capped at £2,190 a month. You'll need to be able to prove that your business has been adversely affected by coronavirus on or after 14 July to claim. You'll also need:
- to have filed a tax return for 2018/19
- to earn more than 50% of your total income from self-employment
- an average trading profit of less than £50,000 a year.
Grants are based on your profits over three tax years.
However, not all self-employed people are eligible for the SEISS. To find out more about the scheme and to learn about other avenues of support visit:
Find out more
- Learn more about skills shortages and COVID-19.