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% (five million) 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?

The Institute of Fiscal Studies highlighted sectors most directly affected by the pandemic and its restrictions:

  • accommodation and food
  • arts and leisure
  • childcare
  • domestic services
  • non-food and non-pharmaceutical retail
  • passenger transport
  • personal care.

According to an Enterprise Research Center (ERC) report, COVID-19 and self-employment in the UK (April 2020) the self-employed were identified as a 'particularly vulnerable group', and growing numbers of this group are degree holders. For example, in 2016 one third of all self-employed in the UK were graduates.

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.

A November 2020 report by the Centre for Economic Performance titled COVID-19 and the self-employed: Six months into the Crisis found that:

  • Between April and August the self-employed experienced little economic recovery, with hours and incomes remaining significantly lower than the same time last year. Solo self-employed and older workers continue to be the most negatively affected.
  • Those who find work through apps - such as private hire drivers - are among the least negatively affected, with a third reporting having more work than usual. At the same time many consider their health to be at risk but continue working due to concerns about loosing their job.
  • One fifth of workers think it likely that they will leave self-employment.
  • Self-employed workers were over optimistic during the lockdown and they are now pushing back their expectations on when their businesses will be back to normal.
  • The self-employed have benefited from the renewed availability of government support but even six months into the crisis their awareness of support schemes on offer remains limited.

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 recovering or 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, their finances and their mental health?

If you've carefully weighed up your options and have decided to set up your own business discover things to avoid when starting a business.

What help is available for the self-employed?

In response to the COVID-19 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.

The scheme so far is made up of four grants. The first two are now closed - these were paid to cover spring and summer 2020. Chancellor Rishi Sunak recently confirmed a third and fourth grant to cover winter 2020/21 and spring 2021.

The third taxable grant will cover 80% of your trading profits for November, December and January up to a total limit of £7,500. Applications for this third grant opened on 30 November 2020 and will close on 29 January 2021.

Subsequently a fourth grant will cover from February 2021 to the end of April.

To be eligible for the SEISS you'll need to be able to prove that your business has been impacted by reduced demand due to COVID-19 in the qualifying period. 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
  • you intend to continue to trade. You cannot claim if you plan to close your business.

Grants are based on your profits over three tax years.

You can keep working while claiming the grant and you don't need to have applied for the previous two grants to get it.

However, be aware that not all self-employed people are eligible for the SEISS. For example the newly self-employed do not receive help under the scheme.

To apply for the third grant you'll need to visit the official government claims portal. To make a claim you will need:

  • self-assessment unique taxpayer reference
  • National Insurance number
  • Government Gateway user ID and password
  • UK bank details.

You must make the claim yourself. Another person cannot make it on your behalf.

To find out more about the scheme and to learn about other avenues of support visit:

Find out more

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