Empowering the Freelance Economy

Self-employed denied SEISS worse off than furloughed says IFS study

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Those self-employed workers who lost 100% of their work in the first lockdown saw a sharp rise in deprivation in the wake of the pandemic. Their financial circumstances have seen little improvement, according to a Joseph Rowntree Foundation study.


As a result of the onset of the pandemic in Spring 2020, the share of workers that were behind on at least one of their household bills jumped from 2% to 13%. Those reporting financial difficulties went from 16% to 24%. By the start of 2021, the proportion behind on their bills was little changed from the first lockdown (at 15%), though the proportion reporting financial difficulties had fallen back (to 11%).

In early 2021, unemployment, real earnings growth, arrears on household bills, and food bank use were all at similar overall levels to pre-pandemic. But this masks the circumstances of those groups who have seen clear increases in hardship – particularly the self-employed, people from ethnic minority groups, and families already in in-work poverty before the pandemic hit, said the report.

These continued difficulties likely relate to the large fraction (36%) of all self-employed workers who were ineligible for the Self-Employment Income Support Scheme. Rises in deprivation were considerably smaller for furloughed employees than for the self-employed who lost work.

The Institute for Fiscal Studies

“The relatively benign aggregate figures on deprivation hide three overlapping groups who have fared considerably worse: self-employed workers who lost all their work during the first lockdown, families who were in in-work poverty prior to the pandemic, and people from ethnic minority groups,” said Tom Wernham, an author of the report and a Research Economist at IFS.

Tom Waters, an author of the report and a Senior Research Economist at IFS, said, “As the furlough scheme is wound down, and the temporary uplift to Universal Credit expires, the increased support is withdrawn. So the key factor for material living standards this year will be how many people either return to their old jobs or are able to find a new job relatively quickly.”

When is it time to get help with debt?

If you owe more than £750 to say the HMRC, it could start bankruptcy proceedings against you. You can find more details about how this would work on debt charity StepChange’s bankruptcy from creditors page.

Can a creditor make you bankrupt?

Your creditors could make you bankrupt as a last resort if you can’t, or won’t, pay your debts.

If a creditor applies for your bankruptcy, the effects on you are the same as if you made yourself bankrupt, but the creditor pays the fees instead of you, according to StepChange.

“Most bankruptcy applications are made by people in debt who want to go bankrupt. Creditors are less likely to apply for bankruptcy because they have to pay a large fee up front. Because of this, most creditors would only consider doing this if they’re sure you have enough assets or income to guarantee the bankruptcy will get them all their money back,” said the debt charity.

If you want to tackle your debts so that you can create a good credit rating in the future, you may want to consider an individual voluntary arrangement (IVA).

An IVA is a formal and legally binding agreement between you and your creditors to pay back your debts over a period of time. This means it’s approved by the court and your creditors have to stick to it. An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider.

Citizens Advice

What debts can go into and IVA?

Unsecured debts can only go into an IVA. Examples include:

  • Bank loans
  • Credit cards
  • Overpaid Benefits: Child Tax Credits paid in error being the most common.
  • Unpaid Income Tax: Any outstanding income tax.
  • Unpaid Utility Bills: From previous addresses.
  • Unpaid Council Tax: Any outstanding council tax including the current financial year.
  • Unpaid Mobile Phone Contracts: Where the phone is no longer being used.

To learn more about what debts can go into an IVA follow this link.

What debts cannot go into an IVA?

An IVA is unable to assist with debts related to:

  • Court fines
  • CSA arrears
  • Debts arising from fraud
  • Secured debts
  • Unpaid VAT bills
  • Unpaid PAYE bills
  • Debts under dispute

What to do if you’re struggling to pay your energy bills?

At the moment, your energy supplier won’t disconnect your gas or electricity if you miss a payment. If you’ve got a prepayment meter and you don’t top it up, your energy supply might still stop, according to Citizens Advice.

According to Citizens Advice, your supplier has to help you come to a solution. You should try to negotiate a deal that works for both of you.

If you don’t try to negotiate with your supplier, however, they might threaten to disconnect your supply.

For more ways to handle your late energy payments, follow this link. There are different things you should do if you can’t afford to top up your prepayment meter.

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