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Government help for the self-employed update

When the UK went into lockdown in March, the effect on the nation’s self-employed was instantaneous. Around 15% of the UK workforce – which…

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When the UK went into lockdown in March, the effect on the nation’s self-employed was instantaneous. Around 15% of the UK workforce – which equates to around five million individuals – were at risk of staring into a financial abyss as projects came to a sudden halt, contracts were cancelled, and regular work dried up. 

From March, some contractors who operate through their own limited company and found themselves adversely affected by the COVID-19 crisis were able to take advantage of the Coronavirus Job Retention Scheme to furlough themselves and claim 80% of wage costs. And then came the £10 billion Covid-19 package through the Self-Employment Income Support Scheme (SEISS), allowing self-employed workers to apply for a similar grant worth 80% of their average monthly profits to help them cope with the financial impact of coronavirus. However, this grant came with several caveats that prevented many from claiming, forcing them to turn to other forms of support including Universal Credit and Working Tax Credit.  

Extended rules to the eligibility criteria have since made it possible for more self-employed workers to claim the SEISS grant, but change is on the horizon. Here are the latest updates on what help the self-employed can access as the pandemic continues: 

Ending the furlough scheme and its implications 

Freelancers who work part time for a company on payroll or are self-employed and pay themselves through their own company may have been able to qualify for the furlough scheme, which covers 80% of their salary up to £2,500 per month if on furlough leave. This includes full-time, part-time, flexible, zero-hour and agency workers if they were on their employer’s PAYE payroll on 19 March 2020. Some 9.6 million workers have been furloughed by 1.2 million employers since the scheme was launched. 

But this help is coming to an end soon.  

In a bid to get more people back at work, the government is gradually scaling back financial help. In September, businesses that have put staff on furlough have to pay 20% of their wages before the scheme ends on 31 October. Understandably, many are concerned the furlough scheme is ending too soon and will lead to widespread job losses.  

The government hopes its new ‘jobs retention bonus’ will combat this. Businesses that bring furloughed employees back to work before January 2021 are eligible to receive a £1,000 bonus per employee, as long as they pay them at least £520 on average, in each month from November to the end of January.  

Accessing SEISS and other SME grants 

SEISS is part of a package of support for self-employed people, including Bounce Back loans, income tax deferrals, rental support, increased levels of Universal Credit, mortgage holidays and the various business support schemes the government has introduced to protect businesses during this time.   


The scheme is available to all self-employed individuals that have been adversely affected by COVID-19 and offers the same compensation as the furlough scheme: a taxable grant of up to 80% of their average monthly profit, if they meet certain conditions. The criteria include:  

Earning the majority of their income through self-employment.

Having average annual trading profits of less than £50,000.

Having filed a tax return for the 2018/19 tax year. 

Having traded during the 2019/20 tax year with the intention of continuing to trade in 2020/21.  

They must also prove that their business has been directly impacted by COVID-19, which means that any of the following must apply:  

Their trade or industry had to close or be restricted, meaning they couldn’t work or were otherwise adversely affected.

They workplace or work itself isn’t safe. 

Customers can no longer purchase from the business due to restrictions. 

Social distancing means they can’t safely serve customers. 

Contracts have been cancelled as a result of COVID-19. 

They have either had to care for others since lockdown or have been self-isolating. 

The deadline for the first grant was 13 July 2020, and claimants could receive either £7,500 or 80% of their average monthly profits over the 2016/17, 2017/18 and 2018/19 tax years (whichever is the lower amount). Applications for the second and final grant – covering 70% of average monthly trading profits – opened on 17 August and closes on 19 October. 

The eligibility criteria remain the same as for the first grant. Additionally, self-employed workers who had previously not been eligible for the grants due to being on maternity or paternity leave, or being a military reservist, may be able to make claims for the first and second SEISS grants at the same time, despite applications for the first grant having already closed. 

Other help 

Those who don’t have a full year’s self-assessment history, i.e. they started self-employment in the 2019-20 tax year and haven’t submitted a tax return for the 2018-19 tax year, unfortunately don’t qualify for SEISS. 

Instead, contractors getting less work or no work because of COVID-19 can apply for Universal Credit or the New Style Employment and Support Allowance, if they or someone they care for has a disability or health condition that affects how much they can work. This includes self-isolating because they have symptoms of coronavirus.  

What will the future of flexible working look like?  

In times of crisis, self-employed workers are likely to feel the economic fallout acutely. Nevertheless, freelancers and flexible workers will play a vital role in driving the UK’s economic recovery.  

As many businesses pause recruitment, they are turning to freelancers and contractors to plug the resource gap, opting for highly skilled, experienced workers on flexible terms to deliver the best results. Indeed, a study by research firm Gartner found that a third of employers are replacing full-time employees with contingent workers to fill labour shortages and save costs longer term. 

Of course, some industries continue to thrive amidst the pandemic and will need more freelancers and contractors than ever to manage talent shortages. As the economy picks up and the wheels of enterprise start spinning, fresh talent needs will likely be met by freelancers. 

One thing the pandemic has certainly highlighted is that remote work, and the talented freelancers who work remotely, will increasingly be the norm. Businesses who were previously against this have been forced to rapidly adopt more flexible, remote working models. Even beyond the pandemic, it’s likely that many will remain open-minded to working with remote, independent freelancers than ever before.  

It may be tough going now, but general projections point to freelancers and contractors being the big gainers in the coming months and years. With this in mind, it’s more important than ever that this rapidly growing workforce is properly protected. Kingsbridge’s insurance packages have been designed specifically for contractors and freelancers, offering the most comprehensive and compliant contractor insurance cover on the market. To find out more, please give one of our friendly team a call on 01242 808740.  

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