Self Employed - Does Anyone Have Backup?

annetheman

I feel terribly for everyone affected by this (which is all of us)! But especially so for the self-employed. Until 2 years ago, I was a self-employed limited company contractor but when I first started, I was advised to get protection in case "the worst happens":
-insurance, especially IPI
-build up a stash of savings/profit not used to pay dividends just for the business

I was advised this wouldn't cover my "usual pay" but would tide me over in the tough times. I thought this was what everyone who is self-employed did so that should you become ill or a catastrophe such as this happen, you can still survive at least 6 months with no new business. It seems most don't have this or am I just seeing the microcosm of people who don't because they're seeking help online? I think it's unfair that some weren't advised about contingency planning when starting their business.

Should this type of protection become compulsory for ltd companies, in the same way for example professional indemnity/public liability insurance is if working for a client?

Flugelhorn

It is difficult - it is a bit like all people being advised when budgeting to set up an emergency fund for when times get tough, if cash is short at the time then that tends to slip down the list as immediate bills need paying... and people think "yes I'll look at that later"

iklooshar

I have run a not for profit self employed partnership as a theatre company for 23 years. We pay taxes, have had project grants from arts council England and entertain about 20,000 people a year in theatres, schools and art centres. All our bookings have been cancelled or postponed for the foreseeable future. Yes we have contingency money to last us for some months. Unfortunately this is a very unusual situation where theatres could be closed or go under for 6 months and schools are closed.  Life will be extremely disrupted in the creative industries as many venues may be forced to close. 

Is it wise then that this contingency fund should go towards surviving for 6 months until it is gone and then we can go on universal credit and close the business? All our expertise and ability to bring joy to people’s lives will cease. Surely better that the government gives support to us just as it does for other businesses so we can survive this monumental challenge. A fund for self employed should not be means tested at all  as many need extra emergency funds for cash flow and for developing new products and in our case performances. It should also be a realistic amount for families to survive.

This lack of help apart from being extremely painful for all companies like ourselves, is very bad long term planning from the government as it will make many more people dependent on financial assistance in the future.

calcotti

annetheman said:

... It seems most don't have this or am I just seeing the microcosm of people who don't because they're seeking help online? I think it's unfair that some weren't advised about contingency planning when starting their business.

When I had a business I knew I needed it - but I never managed to achieve it.

Jeremy535897

Pressure is building on Government to do more for the self employed, so keep watching the news.

Undervalued

Flugelhorn said:

It is difficult - it is a bit like all people being advised when budgeting to set up an emergency fund for when times get tough, if cash is short at the time then that tends to slip down the list as immediate bills need paying... and people think "yes I'll look at that later"

True but in many cases it depends on priorities too.

Yes, sadly there are a significant number of people who are genuinely struggling and find it incredibly difficult / impossible to save anything for a day.

However there are plenty more who just don't see it as a priority. I used to know a number of couples, with two respectable professional salaries coming in each month, who enjoyed a lifestyle that used every penny of it! 

Zanderman

annetheman said:

...... I was advised to get protection in case "the worst happens":
-insurance, especially IPI
-build up a stash of savings/profit not used to pay dividends just for the business

I was advised this wouldn't cover my "usual pay" but would tide me over in the tough times. I thought this was what everyone who is self-employed did so that should you become ill or a catastrophe such as this happen, you can still survive at least 6 months with no new business. It seems most don't have this or am I just seeing the microcosm of people who don't because they're seeking help online? I think it's unfair that some weren't advised about contingency planning when starting their business.

You're making a lot of assumptions - and i'm not sure you're understanding the issues facing self-employed people in this crisis.  Which is rather more than a 'tough time' in most self-employed people's terms..

Most people I know who are self-employed work in fields where income is sporadic and unreliable, some good contracts now and then, some fallow weeks, or sometimes piece work every day or sometimes only 1 day a week.  I doubt there is any insurance product out there that would be available for them.  So insurance is probably a red herring.

As for being 'advised when they started up' - advised by whom??  Setting up a business is a personal thing - there's no formal process.  So there's no mechanism to be advised about anything.  That's not 'unfair' that's just life.

Most people in this situation have, however build up some reserves - but those are for lean times in the normal pattern of business, not for complete cessation of the business for an unknown number of months.  After which the business may be impossible to re-start.

The reason people are worried - and the 'unfair' bit, is that this crisis has forced people out of work, instantly. For an indefinite period. Employed people are being offered help - 80% of their salaries.  Self-employed people are being offered virtually nothing - except Universal Credit which, if successfully obtained, will give a tiny fraction of their income (nowhere near 80%). 
Those lucky enough to have decent reserves to tide over hard times will, unless the cash is within a limited company (and most self-employed i know are sole traders and have no ltd company) be ineligible for UCredit because they have some savings.  So they may, actually, get nothing, but have to spend their reserves. The employed aren't having to do that.

That's why the self-employed are coming online to ask for help.  They've had their livelihoods whipped away from under them by the Govt and the Govt isn't helping.  But it is helping the employed.  There's no logic in that.

ffc58

I have read all of the comments and i am in the same boat .No chance of UC for what it is worth.
I cannot see my work picking up until next year.
Work was all cancelled early Feb.And i have been chasing invoices for work done 
Nov/Dec /Jan .And people are not paying up as they are worried about funds.
So double whammy.
Why are we not being treated like other workers? 
.
.     .

Becles

I couldn't get income protection insurance as the premiums were too high due to existing health conditions. So I did the sensible thing and built up a nest egg of savings just in case the worst happened.

Unfortunately the worst did happen and I recently had two major surgeries in under a year that required a long time off work each time.

Now I've been hit for a third time with an unknown period of time off work and I've got little savings to help me out.

Yes I can claim £94 Universal Credit. However, I already claim some child tax credit. In order to claim the £94, I have to close the child tax credit claim and claim Universal Credit. To me, it's not £94 a week additional income. It's £94 less my child tax credit, so only a small increase in what I would be getting.

In normal circumstances I'm not entitled to a penny under Universal Credit. Once things return to normal and I'm back making my normal wage, I cannot reclaim the child tax credit, so I will lose out in the long run if I claimed UC.

I'm not entitled to any other help as I don't have business premises or any employees. I can defer my tax bill due in July to January 2021 and I might be able to claim a payment holiday on my mortgage if my lender is willing, but this isn't income. That's just putting off debts that still have to be paid at some point.

I'm a single parent. For benefits purposes, I only have to work 16 hours a week. If I'd done that, I would have been claiming maximum child tax credit and also maximum working tax credit. I've chosen to work full time and therefore I've "saved" the government a small fortune by providing for myself and taking much less out the benefits pot. And my reward for my hard working conscientious efforts is at times of crisis like this? The government has turned its back on me and offered me no help.

I'm going to the supermarkets tomorrow to see if I can get any shelf stacking work to cover my loss of wages. However, I'm also immunosuppressed and have been advised to social distance myself for 12 weeks as I'm vulnerable. I've done all I can to support myself and my children in the past and now I'm being penalised as I have to compromise my health to earn money, while employed people are happily sitting at home getting 80% of their wages paid by the government. This is why I am annoyed by the whole situation.

calcotti

Becles said: Yes I can claim £94 Universal Credit. However, I already claim some child tax credit. In order to claim the £94, I have to close the child tax credit claim and claim Universal Credit. To me, it's not £94 a week additional income. It's £94 less my child tax credit, so only a small increase in what I would be getting

In which case you would get more than £94/week. On top of this you would get the child elements (which replace the CTC but are worth less).

Use a benefit calculator https://www.gov.uk/benefits-calculators to check what your entitlement may be. Note howeve4 that the calculators probably don’t include the extra money announced yesterday (about £85/month). Do calculations for now but also based on your previous earnings - if you were entitled to

As you say you will not be able to return to CTC later. 

Becles

calcotti said:

Becles said: Yes I can claim £94 Universal Credit. However, I already claim some child tax credit. In order to claim the £94, I have to close the child tax credit claim and claim Universal Credit. To me, it's not £94 a week additional income. It's £94 less my child tax credit, so only a small increase in what I would be getting

In which case you would get more than £94/week. On top of this you would get the child elements (which replace the CTC but are worth less).

Use a benefit calculator https://www.gov.uk/benefits-calculators to check what your entitlement may be. Note howeve4 that the calculators probably don’t include the extra money announced yesterday (about £85/month). Do calculations for now but also based on your previous earnings - if you were entitled to

As you say you will not be able to return to CTC later. 

I've had someone look at my salary before when Universal Credit came out and I was advised to remain on tax credits as it's more generous for my circumstances. I've just ran my usual wage through Turn2Us and it came out as a zero award for UC.