⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.
Coronavirus: Self-employment: work changes
The coronavirus (COVID-19) outbreak is having far-reaching financial impacts on individuals and businesses across the UK, and indeed across the world. You may be worried about a reduction to your income or that you may lose your job. This page tells you what you may be able to claim.
This page explains what help may be available for self-employed individuals who have seen their hours reduce or self-employed work stop completely. If you are ill or self-isolating, see our other guidance.
Help from the tax system/government support
The Government have announced a package of support for businesses – you may be able to access some of this help. If you employ people, there is also some specific support for employers. We have produced some information about how the tax system might be able to help you at this time.
If you (or your partner) are already receiving tax credits or other benefits
If you are receiving tax credits – working tax credit and/or child tax credit then there may be some impact of your current situation.
To get working tax credit, you have to be working a certain number of hours (based on your circumstances).
If your self-employment has been impacted due to coronavirus which means you can’t trade temporarily or your working hours have reduced, then as long as you are still trading (i.e. you haven’t completely closed down your business) HMRC will treat you as continuing to work your normal hours (those before the reduction due to coronavirus situation) until the Job Retention Scheme ends on 30 September 2021.
You did not need to tell HMRC about a temporary change in your hours because of coronavirus up to 30 September 2021. We explain what happens from 1 October 2021 on our tax credits and coronavirus page.
⚠️ Note: If you cease self-employment completely and don’t intend to continue trading then you will need to report that as a change of circumstances to HMRC when your self-employment ceases.
You can find out more about tax credits and work changes due to coronavirus on our tax credits page.
Working tax credit increase
The Government temporarily increased the basic element of working tax credit by £20 a week (on top of the previously agreed annual uprating) to £3,040 for 2020/2021. This increase ended on 5 April 2021 and was replaced with a £500 one-off separate payment for certain working households in receipt of tax credits.
Tax credits are based on annual household income. You should be sure to give HMRC an updated estimated income for 2021/22 so they can see if your award can be adjusted. You must remember that this is about annual income and be careful not to over-estimate any fall in income as if you do there may be an overpayment at the end of the year. Whether this leads to an increase in your award depends on whether your household income for 2021/22 fell by more than £2,500 compared to your previous year income (in 2020/21). If the reduction in your income was less than £2,500, then there will be no change to your award for 2021/22.
⚠️ Warning: If you are already in receipt of tax credits and find yourself needing extra financial support, for example you need to claim help with paying your rent, you may need to claim universal credit (UC). If you do this, your tax credit claim will end and it is unlikely you will be able to go back to tax credits at a later date. If you, or you and your partner if you have one, have reached state pension credit age, then you cannot claim UC – but may be able to claim pension credit instead.
UC is gradually replacing six other benefits: working tax credit, child tax credit, housing benefit, income support, income-related employment and support allowance and income-based jobseeker’s allowance. HMRC state that the majority of people can no longer make claims to these other benefits unless you are a frontier worker. Instead, if you need financial support you will need to claim UC.
You should also be aware of the following:
- If you or your partner are classed as a ‘frontier worker’ you may be able to make a claim for one of the benefits that UC is replacing such as housing benefit alongside your existing tax credits. See our information in the main part of our website. This is complex and you should seek advice BEFORE making any UC claim if you think this might apply to you.
- If you are currently receiving any of the benefits UC is replacing, they will end when you make a UC claim.
- UC takes into account savings and your partner’s circumstances and income. If their income is too high, you may not qualify for any help.
The benefits system is complicated. If any of the points above apply or you are unsure, you should seek specialist welfare rights advice before making any UC claim.
The MIF was suspended due to the coronavirus pandemic for all claims from 6 April 2020. While the MIF was suspended, your award should have been calculated based on your actual net income (after deducting allowable expenses and tax, NI and pension contributions) from self-employment – if you were receiving UC and you previously had the MIF applied you may have seen an increase in your UC during the suspension.
The blanket suspension of the MIF ended on 31 July 2021. The MIF is reintroduced from that date. This means, in cases where the MIF applies, where your earnings fall below a threshold (broadly, national minimum wage x number of hours work agreed in your claimant commitment, minus notional tax and national insurance), you will be treated as though you have earned that amount when your UC award is calculated. However, between 1 August 2021 and 31 July 2022, DWP have some flexibility in how they apply the MIF.
If you are receiving other benefits, you should contact your local authority or DWP to ask how the change in your work/income affects that benefit.
Claiming benefits for the first time
If you have never claimed any tax credits or benefits, you should use one of the following online calculators to see what you may be entitled to: