Last updated 27 May 2020
Many self-employed people are facing a loss of earnings due to the outbreak of coronavirus disease (COVID-19). There is financial help that they can access through the benefits and tax credits system. There is also government help available through the Self-Employment Income Supplement Scheme (SEISS).
•If you are already getting housing benefit (HB) or tax credits and your earnings have reduced, report that immediately because your benefits might increase.
•If you are already getting HB or tax credits and you are told to claim universal credit (UC), get advice. Claiming UC stops your HB and tax credits, and you will not be able to get them back.
•If you are not already getting HB or tax credits, you can claim UC.
•From 30 March 2020, the UC minimum income floor can be suspended for any self-employed person if this is considered reasonable.
If you are already getting benefits or tax credits
You may already be getting benefits or tax credits that top up your earnings, such as HB, child tax credit (CTC) or working tax credit (WTC). If your earnings have reduced, your entitlement to these may increase. You should report the change in your earnings to the local authority (for HB) and to the Tax Credits Helpline on 0345 300 3900, or you can
Some of the WTC rules have changed due to the outbreak of COVID-19. You can
If you do not have enough to live on, you may be advised to claim UC. You may be better off claiming UC but get advice before you claim. Claiming UC usually means your tax credits and any HB you get are automatically stopped, and you will not be able to get them back.
Claiming universal credit while self-employed
You can claim UC if you are in or out of work. Your income must be low enough to qualify. Your capital (eg, savings, investments or property that is not your home) must have a current value of no more than £16,000. The value of business assets are ignored while you are working in the business and if you stop trading continue to be ignored for at least six months if you are taking reasonable steps to sell them.
•an allowance for yourself or a higher allowance if you are in a couple;
•amounts for children;
•extra amounts for children getting disability benefits;
•an amount to help with rent;
•an amount for childcare costs while working; and
•an amount if you are a carer for a severely disabled person, or you are ill or disabled and not expected to work or look for work.
These amounts are added together to give your UC ‘maximum amount’ for that monthly 'assessment period'. Any income you get during that month may be deducted either in full or in part to give the amount you are paid at the end of the month. Your monthly assessment period is set using the calendar month starting with the date you submit your UC claim. You are normally paid seven days after the end of each assessment period. For example, if you submit your UC claim on 22 April, each assessment period runs from the 22nd of each month to the 21st of the next month with payment due on the 28th of each month. While waiting for your first payment, you can request an advance of UC but you will have to repay it.
If you have self-employed earnings, you must report earnings received during each UC assessment periods. You report through your UC online account, usually within seven days of the end of each assessment period. You must also report any outgoings during that assessment period related to that work, such as materials, travel costs, tax, national insurance and pension contributions. If you make a net loss in any month, the loss may be carried over and deducted from any self-employed earnings when calculating UC for subsequent assessment periods.
Normally, if you are ‘gainfully self-employed’, and your net earnings for any assessment period are below a set amount called the ‘minimum income floor’, you are treated as if you had earnings equivalent to the minimum income floor when calculating your entitlement to UC for that assessment period. From 30 March, the DWP can suspend the minimum income floor for anyone for the duration of the outbreak of COVID-19. If it is suspended, only your actual income is taken into account when calculating your UC entitlement. You will not be expected to go to the jobcentre to verify that you are in gainful self-employment.
Example Single claimant
Ben works for himself as a photographer. He pays rent of £400 a month. He is single and has no children. Normally Ben's net earned income each month is around £2,000 but because of COVID-19 his work has dried up, so he claims UC. His monthly maximum UC for himself and to help with his rent is £809.89. He has £500 net earnings in the month after he claims UC. Because he has some earnings, he does not get maximum UC. He is paid £494.89 UC, seven days after the end of the monthly assessment period.
The following month Ben’s net income is nil. He reports this through his UC online account. He is paid the maximum £809.89 UC, seven days after the end of the monthly assessment period.
Example Couple with a child
Mahira and Ali are a couple who live together, they have a baby, and rent their house for £450 a month. Mahira works in TV production on a self-employed basis and normally has average net earnings of £2,500 per month. Ali is the full-time carer for their baby. Due to the pandemic, most TV production has stopped although Mahira is still doing some work at home. They claim UC as a couple. Mahira's net earnings that month are £800.
Their monthly maximum amount of universal credit for themselves, the baby and to help with rent is £1,279.87. Because Mahira has some earnings, they do not get maximum UC. They are paid £959.83 UC, seven days after the end of the assessment period.
How to claim universal credit
You normally If you normally live with your partner, you must make a joint claim. You each create an individual online account, and use the 'partner code' you are given when prompted to join your accounts during the claims process. You can
There is help available with UC claims, including from the organisations listed below.
•Housing associations may have a welfare rights team who can help and advise tenants about making a UC claim.
Extra support for the self-employed
The government started taking claims for grant payments through the Self-Employment Income Support Scheme (SEISS) on 13 May 2020. If your application is successful, payment should be made within six working days.
To qualify for SEISS you must:
•have filed a tax return for the tax year 2018/19 as self-employed (the deadline to submit it was 23 April 2020); and
•have profits of less than £50,000 in 2018/19 or average profits of less than £50,000 in 2016/17, 2017/18 and 2018/19.
If you qualify for a SEISS payment, it will cover 80 per cent of average monthly profits up to £2,500 a month for three months, ie, up to £7,500 in total. SEISS is initially paid for March, April and May. If you are claiming UC, the government treats SEISS payments as earnings in the monthly UC assessment period in which you receive them. This means they will reduce the amount of UC you get for that assessment period. Any reported net losses from previous UC assessment periods, as well as outgoings for the current assessment period, may need to be deducted from your SEISS payments when calculating your UC award.
If you get no UC for that assessment period because your earnings are too high, your UC should automatically go back into payment if your income drops again within the next five months. However, depending on how high your SEISS payment is, some of it may be carried over into future UC assessment periods as ‘surplus earnings’ and so affect how much you get for those assessment periods.
Other financial help
As well as continuing to get HB and tax credits or claiming UC, a drop in income might mean you now qualify for help with your council tax. Check your local authority’s website for what is available and how to apply.
If you have been paying national insurance and are up to date with your contributions for the last two complete tax years before the current calendar year, you may qualify for employment and support allowance (ESA) if you are self-isolating or not well. Self-employed Class 2 national insurance contributions count for ESA. If you have paid sufficient Class 1 contributions as an employee for at least one of the last two complete tax years before the current calendar year, you may qualify for jobseeker’s allowance (JSA) if you are not working now. You can get either JSA or ESA even if you cannot qualify for UC because your savings or other capital is too high, or your partner has a high income.
Normally, for JSA, you need to be available for and actively seeking work, but from 30 March 2020 the government has suspended these requirements for three months. Normally, for ESA you need to provide a ‘fit note’ from your GP to say you are currently unfit for work. If you are ill or self-isolating because of COVID-19, however, there is no need to provide a fit note. Use the links below to find out more about whether you can get JSA or ESA and how to apply.
Other support for businesses
The government has introduced other kinds of temporary support for businesses, including a Job Retention Scheme, grants, loans and tax relief. You can This type of business support should not affect any UC you get for at least 12 months. If you are in Scotland, the Scottish Government has made some separate support available which you can