Can the self-employed file for unemployment benefits?

While work has been picking up, COVID-19 is still making the contractor market very competitive, especially when you factor in the second national lockdown we’re embarking upon. There are lots of contractors all bidding for a limited number of jobs and, sadly, there is not enough work for everyone right now. We know from earlier this year that the support for the self-employed is patchy at best and non-existent at worst. So, if you’re finding yourself with reduced work and no income, you may be wondering if you’re able to claim unemployment benefits.

Well, if you’re earning little or no money through your business then the answer is yes, you can.

Universal Credit

Job Seekers Allowance is one of the benefits that has been absorbed into Universal Credit along with Housing Benefit, Income Support, Employment Support Allowance, Child Tax Credit, and Working Tax Credit. Universal Credit takes the form of a single monthly payment designed to help with your living costs by either topping up or covering your income. It can be paid out if:

– You’re on a low income or not working

– You’re 18 or over

– You or your partner are under State Pension age

– You and your partner have less than £16,000 in savings between you

– You live in the UK

The full eligibility criteria can be found on the GOV.UK website.

As a self-employed person, you need to provide details of your earnings each month so that your Universal Credit can be calculated. Information you need to provide includes: how much you’ve earned through self-employment, any monies paid into a pension, the total amount your business received, the total paid out in business expenses, and how much tax and National Insurance your business paid. This information will be used to calculate your Universal Credit payment for the month and means you should always get the right amount rather than being under- or over-paid.

You can apply for Universal Credit online, although you may get a call-back to confirm your details. Remember, if you and your partner live together then you need to make a joint application. When you apply, you’ll need your bank details, your email address, information about your housing (e.g. mortgage repayments), income details, details of savings or investments, and any childcare costs if applicable. You will also need to verify your identity online, so have a form of ID to hand, such as your passport, driving licence, or debit or credit card.

Self-Employed Income Support Scheme

The government’s Self-Employed Income Support Scheme (SEISS) has been extended and increased to reflect the changes to the Coronavirus Job Retention Scheme (furlough scheme). So, if you’re eligible, you may prefer to go down this route rather than claiming Universal Credit.

The scheme will pay a taxable grant worth 55% of your average trading profits for the period from 1st November 2020 to 31 January 2021.The November part of the grant is being raised to 80% instead of the previously announced 40%, which raises the overall grant to 55%. Confused yet? At least you don’t have to work out the amount yourself. Simply put in your claim when the claims window opens on 30th November and HMRC will work out what you’re owed.

A second grant will cover 1 February to 30 April 2021, but the government is yet to announce how much this will be.

It’s worth noting that if you claim Universal Credit, claiming SEISS could affect your payments, so you should take a good look at your situation before deciding what to apply for.

SEISS is also not available for limited company directors, so if that’s you, and if you’re also not able to claim Universal Credit, you may want to see if it’s worth using the furlough scheme to furlough yourself in order to received 80% of your PAYE salary. That way, you’re at least getting something.

Who to ask for assistance?

The world of benefits and support can be confusing, especially if you’ve never claimed before and don’t really know what you’re doing. The good news is that help is at hand. Most local councils offer help and support for claiming benefits and are currently able to give advice on what COVID support is available. You can usually find the information on their website, or else give them a call to get guidance from someone who knows their stuff.

You can find out the name and website of your local authority with GOV.UK by searching your postcode here.

It’s a difficult time at the moment and, although we’re not all in the same boat, we are all in the same storm. So, decide what support you need, and don’t be afraid or ashamed to ask for it. People will be more willing to help than you might think.