Sole Trader freelancers: pathways to support
If you’re worried about your finances and wondering what support may be available to you, this page suggests a number of steps to take.
1 – How long have you been a sole trader?
If you are registered as a sole trader, the government calls you ‘self-employed’.
The scheme that’s designed to support you is called the Self-employed Income Support Scheme.
The scheme works when the government has received a tax return from you for the tax year 2018-19. The deadline for submitting this return was 31 January, extended to 23 April 2020.
Because the scheme is worked out on average profits over the last three tax returns (or the last two or just the last one if you started trading in 2018-19), there is a calculation you can do to see how much you might expect to get.
UPDATE 29 May: From 17 August Sole Traders can apply for a second 3-month grant under the SEISS. Our online calculators have been updated.
UPDATE 7 May: HMRC has now clarified how it will work out profits for this scheme. They also have an eligibility tool:
If you set up as a sole trader after 6 April 2019, this scheme doesn’t work for you.
It might not bring you much support even if you were a sole trader in 2018-19 but your profits were small.
Update 10 May 2020: If you live in Scotland and started as a sole trader in the last year or so, you may be eligible for a local authority grant of £2000.
Newly Self-employed Hardship Fund > (Scotland only)
Keep now, pay later
Sole traders are officially a kind of business in the UK, so some of the other business support measures may be available to you.
3 – Check your eligibility for benefits
Benefits may be available to you even if you’re getting a very low income from the Self-employed Income Support Scheme.
It’s worth using a benefits checking site to see what you might be eligible for. It’s like a dry run for applying to the DWP. You can also get advice from Citizens Advice.
Universal Credit may work for you if you do not have support from elsewhere.
To be eligible your household needs to have less than £16K in accessible cash (savings, etc).
- If you live on your own you are the household.
- If you live as a couple, sharing bills, you are both the household.
- If you live in a flat share, but not as a couple, you’re treated as if you live on your own.
[Good news update 15 April 2020: Martin Lewis (the Money Saving Expert chap) reports a written confirmation from DWP that they will NOT count money saved for future sole trader tax bills as ‘savings’. This is a welcome tweak.]
How much will you get?
This is very hard to generalise about. If you are 25 or over, a basic amount may be £450-ish per month. For a couple it would be £550-ish per month. But UC can be substantially higher if you have children, and are paying rent or mortgage interest.
It’s paid monthly in arrears (fortnightly in Scotland), but you can get an advance within days if eligible for UC and in difficult financial circumstances.
4 – Check support from industry bodies
If you don’t get enough from the Self-employed Income Support Scheme, or from benefits, there are a number of charities who might be able to help you.
If you work in film or TV, the Film and TV Charity has set up some emergency funds.
5 – Borrow money from the government (handle with care)
Small businesses can access a bounce back loan. This a special government loan scheme with no interest for a year – then low interest rates for a further five years.
It’s the business that would get the loan, so if you’re a sole trader, the money goes to you as the business. You personally would be liable to pay back the loan.
[If a limited company freelancer accessed the scheme, the money would go to the company as working capital. You could only take it out in the usual ways and would want to take advice on that.]
Martin Lewis of Money Saving Expert has a very good explanation of how the scheme might work for sole traders and limited company directors.
Posted on 14 April 2020