Articles - 1st April 2020

The Covid-19 Crisis plan for freelancers, and the problems with it

Words by The UP team

Chancellor gives support to millions of self-employed individuals, (

Millions of self-employed individuals will receive direct cash grants though a ground-breaking UK-wide scheme to help them during the coronavirus outbreak, the Chancellor announced last week. In the latest step to protect individuals and businesses, Rishi Sunak has set out plans that will see the self-employed receive up to £2,500 per month in grants for at least 3 months.

Millions of people across the UK could benefit from the new Self-Employed Income Support Scheme, with those eligible receiving a cash grant worth 80% of their average monthly trading profit over the last three years. This covers 95% of people who receive the majority of their income from self-employment.

The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. To qualify, more than half of their income in these periods must come from self-employment.

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

The scheme has been designed after extensive engagement with stakeholders including the TUC, the Federation of Small Businesses and IPSE – The Association of Independent Professionals and the Self-Employed.


Coronavirus: Self-employed workers’ bailout has ‘sting in the tail’, (Sky News)

This is, as far as the Treasury is concerned, the final part of the big jigsaw puzzle of measures to address the economic impact of COVID-19.  It is a part which has been eagerly awaited by millions of workers – since the effective shutdown of vast parts of UK plc have affected the self-employed as much as many who work for companies.

And it is, at first glance, extraordinarily generous: the measures to support these workers will cost as much as £9bn over a period of three months. But for these workers there is nonetheless a sting in the tail.

The chancellor signalled that after the virus has passed, there will have to be serious conversations about the way the self-employed are treated in the tax system.

It has wanted them to pay more taxes, arguing that they benefit from loopholes which employees cannot enjoy.

But at every turn they have been defeated by smart campaigners determined to fight the reforms. Rishi Sunak hinted that one of the quid pro quos of this deal is the Treasury will redouble its efforts to clamp down on these loopholes in the coming years.


Self-employed forced on to breadline with no government help, (Financial Times)

Such a steep week-on-week rise in benefits claims is all but unprecedented, leading economists to warn that unemployment may already be rising far more swiftly than during the 2008 financial crisis — despite the government offering help to employers who furlough staff rather than fire them. 

 Many smaller businesses facing a near total loss of revenue are worried about taking on debt to cover wage payments until government help arrives.

Some much larger businesses are taking a more startling approach. A mechanical engineer who worked for Wren Kitchens, a manufacturer and retailer based near Hull, told the Financial Times he was one of many staff informed since the lockdown that they had failed their probation and would be let go with a week’s wages in lieu of notice. His redundancy letter, which did not explain his alleged poor performance, did not even spell his name correctly.

Tim Martin, chairman of the pub chain JD Wetherspoon, earned notoriety after sending staff a rambling video message saying they would not be paid until the government scheme was in place (the company has now been forced to backtrack) and advising them to look for work at supermarket Tesco.

With job losses mounting, many people are facing immediate financial hardship.

The charity Citizens Advice has seen a surge in traffic to its website in the last month, with people searching first for advice on flight cancellations, a week later on sick pay, and then on redundancy and benefits. But on Thursday, the most viewed page was: “What to do if you can’t pay your bills because of coronavirus”.

 The Covid-19 shock has come at a time when many households are ill-equipped to cope with a sudden loss of income.

 Data released this week showed that typical household incomes had been stagnant for three years up to 2018-19, with the income of the poorest 10 per cent no higher than in 2013-14. Research last year by the Resolution Foundation, a think-tank, found that more than half of low and middle income households had no savings at all to fall back on in a downturn.


Creative and worried about cash during coronavirus? You’re not alone, (I-D Magazine)

There was, from the onset of this crisis, a tardy response from the UK government in terms of how — or if — those who were self-employed would be helped through this. Regular employees in Britain were told that they’d be entitled to 80% of their monthly wage until they could safely return to their jobs, should they not be able to do them from home. 

But the self-employed were told to wait a little, as they collectively scrambled to apply for Universal Credit (more than 500,000 in the past 10 days), offering them £94 a week to support their rent payments and food costs until this blows over.

Panic mode ensued — but then the Chancellor of the Exchequer Rishi Sunak announced new measures to help protect us: an increase in Universal Credit to £409.89 per month; business interruption loans for those registered as Ltd. companies; and the coronavirus self-employment support scheme, which would offer self-employed people up to £2500 a month for three months.

It sounds good on paper, but dig a little deeper and you’ll find flaws that will personally affect those who live paycheck to paycheck. 

The coronavirus self-employment support scheme, which is designed to put self-employed people on the same level of support as those in regular employment, well, doesn’t. Rent freezes haven’t been rolled out, so how does an artist waiting on money that will land in their bank account in June pay their living expenses in the meantime? The government have done their best to cater to the needs of the 90% in regular employment. As for the remaining five million? That’s a waiting game.


Creative industries left out of self-employed support, (Financial Times) 

Tens of thousands of freelancers working in the UK’s creative industries say they face financial hardship as the way they structure their tax affairs means they do not qualify for the government’s rescue package for self-employed workers hit by the fallout from coronavirus. 

Creative professionals including camera operators, sound engineers and lighting technicians are calling on chancellor Rishi Sunak to amend the self-employed income support scheme to assist freelancers who trade via a limited company set up.

The Financial Times has been contacted by hundreds of creative professionals who say the large media organisations and production companies they freelance for have long insisted they incorporate as limited companies to comply with IR35 tax rules governing “off-payroll” working arrangements.

 Other workers, including plumbers, builders and tradespeople, said they must use a limited company structure to limit the scope of any future negligence claims. 

Owner-directors typically structure their accounts so they receive around £800 per month via PAYE, but take the majority of their income via a taxable dividend.

However, this structure excludes them from support measures announced last week that will provide grants to self-employed workers. Under the scheme, sole traders with annual profits of less than £50,000 can claim taxable grants worth 80 per cent of their average monthly trading profit over the past three years up to £2,500 per month.

HM Treasury said owner-directors could apply to “furlough” 80 per cent of the PAYE element of their income via its separate job retention scheme for salaried staff and continue to perform their statutory obligations as company directors — so long as that was all they were doing. 

 An online petition set up over the weekend calling for small limited company directors to receive government support has already received over 120,000 signatures.

We champion the freelancers and every entrepreneur who took a leap of faith with their idea.

If this sounds like you, head over to our Virtual Office and send us your best work via an UnderPinned Portfolio. We want to hear from you!

Make your UP portfolio

Related Articles

A checklist for the January 31st tax deadline

It’s boring, but if you’ve saved money specifically for this purpose, it shouldn’t be painful. Here’s what you must do to get through your self-ass...

Read more
The what, how, and why of pivoting as a freelancer

Pivot. It’s one of those words that we often cast off to the figurative bin labelled ‘corporate jargon’ alongside the likes of ‘leverage’ and ‘syne...

Read more
How freelancers can use cold emailing to attract new clients

Have you ever written an email to someone you’ve never met before, asking them for something? It’s tough; cold emails can feel pretty d...

Read more