Sole Trader freelancers: pathways to support

Sole trader

Last Updated on 2 November 2020

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.

Assess > estimate > investigate

Before investigating any form of support it’s important to first assess your current situation, then estimate for the next few months any income/cash from any source (including savings) and compare that to all anticipated costs.

This will help you quantify the level of support you might need before you go looking for it.

And check out our advice and guidance on our Free Stuff page.

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.

Read my blog about this scheme here >

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.

Check our online sole trader profit indicator >

UPDATE 3 March 2021: Grant 4 will cover February-April 2021. Applications will be from “late April”. Grant 5 will cover May-September, but with a lower grant if turnover has not reduced by more than 30%. Applications will open from “late July” for grant 5. More information to come.

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 2 November 2020: If you live in Scotland or Wales, you may be eligible for a freelancer hardship grant through local schemes.

See the links on our Support page >

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.

Read my blog on the business loan schemes >

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. >

Citizens Advice >

Universal Credit

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.

View a video of a freelance floor manager describing what it was like to apply for Universal Credit >

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.

Check out our support for freelancers page >

Go back to ‘Types of Freelancer’ page >

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.…bounce back loans >

Image credit: Peggy und Marco Lachmann-Anke from Pixabay

Please note:

Although every effort has been made to provide accurate tips and information, David Thomas Media Ltd accepts no responsibility for any errors, omissions or out-of-date facts. Trainees are advised to seek up-to-date professional advice on all financial and tax matters before making decisions relating to these subjects. Nothing in our notes, courses, webinars, downloads or social media should be considered as financial advice.
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Posted on 14 April 2020

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