Coronavirus: Self-employment: work changes

Updated on 27 July 2020

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.

scissors cutting into a clock to signal cut in working hours
(c) Shutterstock / Shazrul Edwan

⚠️ We are working hard to ensure this guidance is up to date – however you should bear in mind that things may change on a daily basis as the Government respond to the ongoing situation.

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).

Based on the information we have received from HMRC, our understanding is that if you are self-employed 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 and the Self-Employment Income Support Scheme close, even if you are not using either scheme.

You do not need to tell HMRC about a temporary change in your hours because of coronavirus until the Job Retention Scheme closes (at present this is 31 October 2020 but this may change).

⚠️ 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.

The Government have announced that the basic element of working tax credit will be increased by £20 a week (on top of the previously agreed annual uprating) to £3,040 next year. How much you get of this increase depends on your circumstances and household income.

You may also be receiving childcare support through working tax credit. Qualifying for this support is linked to your working hours – so as long as you are treated as working your normal working hours you will continue to qualify for childcare support if you need it. See our page about childcare costs and benefits for children during this period for more information.

Tax credits are based on annual household income. Up to 5 April 2020, we were in the 2019/20 tax year, and your award was either based on an estimated 2019/20 income or your 2018/19 income. During the year if your income falls, you can usually give a new estimated income to HMRC. Whether this leads to an increase in your award depends on whether your household income for 2019/20 fell by more than £2,500 compared to your previous year income (in 2018/19). If the reduction in your income was less than £2,500, then there will be no change to your award for 2019/20. However, now that the new tax year has started on 6 April 2020, you should be sure to give HMRC an updated estimated income for 2020/21 so they can see if your award for 2020/21 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.

⚠️ 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. The majority of people can no longer make claims to these other benefits, although there are two exceptions. 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 get or have recently received a severe disability premium in certain benefits or 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 Government have announced that the minimum income floor which can be applied to the self-employed has been temporarily suspended for claims from people while they are sick or self-isolating due to the coronavirus now and for all claims from 6 April 2020. This means your award should be calculated based on your actual net income (after deducting allowable expenses and tax, NI and pension contributions) from self-employment – if you are receiving UC and you previously had the MIF applied you may see an increase in your UC.

If you are self-employed and making a new claim for UC, you do not need to attend a jobcentre office to demonstrate you are gainfully self-employed.

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:

More information on Coronavirus guidance
Information for employers Taking money from your pension
What is the Job Retention Scheme? Help with paying your tax
Employees: illness or self-isolation Information if you are a student or are repaying your student loan
Employees: work changes Accessing money in childcare schemes
Employees: universal credit and pay High Income Child Benefit Charge: What to do if your income falls?
Redundancy explained School closures: family members might be able to claim state pension ‘babysitting’ credits
Support for limited company directors Childcare support and benefits for children
Self-Employment Income Support Scheme Inheritance tax exemption
SEISS parental extension Support for Carers
Self-employment and paying tax Carer’s allowance: can you claim?
Self employment: Illness or self-isolation Volunteering and job opportunities
Self-employment: work changes Scams: please be vigilant!
Help for businesses in Northern Ireland, Scotland and Wales Dealing with HMRC during the coronavirus outbreak
Taking money from your savings Tax guides
More information on self-employment
Am I employed, self-employed or neither?

What tax allowances am I entitled to?

How do I register for tax and National Insurance?

What is the trading allowance?

What business records should I keep?

How do I pay tax on self-employed income?

Working out profits, losses and capital allowances

What National Insurance do I pay if I am self-employed?

How do I work out my taxable profits?

What is the Construction Industry Scheme (CIS)?

How do I prepare my accounts?

How do I work out my profits for universal credit?

What business expenses are allowable?

Do I have to pay VAT if I am self-employed?

Can I claim for pre-trade expenses?

What is Making Tax Digital for VAT?

What capital allowances can I claim?

Pensions and self-employment

What if I make a loss?

How do I repay my student loan if I am self-employed?

When do I make Self Assessment payments and file my tax return?

Penalties and enquiries

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