Self employed sick pay: Your small business guide to benefits and protection

Published Wednesday 26 November 2025

Table of contents

• Can you get sick pay if you're self-employed?
• How your business structure affects sick pay entitlement
• What sickness benefits can I claim if I'm self-employed and sick?
• Self-employed income protection serves as a sick pay insurance
• How to protect yourself in times of sickness if you're self-employed
• Planning your finances when you can't work
• FAQs on self-employed sick pay

Key takeaways

• Recognize that self-employed individuals cannot claim Statutory Sick Pay (SSP) but can access government benefits like Employment and Support Allowance (ESA), Personal Independence Payment (PIP), or Universal Credit when illness prevents work.

• Apply for Employment and Support Allowance if illness affects your work capacity, as you can continue working up to 16 hours per week and earn up to £167 weekly while receiving this benefit.

• Implement income protection insurance as your primary sick pay replacement, which typically covers 50-70% of your average income during sustained illness periods.

• Build financial reserves and use cash flow forecasting tools to prepare for potential income gaps during illness, ensuring your business can survive unexpected health challenges.

Can you get sick pay if you're self-employed?

Self-employed individuals cannot claim because they don't have an employer to provide it. SSP is exclusively paid by employers to their employees.

You can claim other government benefits if you can’t work because of illness, disability or injury. These benefits help if your income drops or stops.

How your business structure affects sick pay entitlement

Whether you can get financial support when you’re sick depends on how you set up your business. The rules are different for sole traders and limited company directors.

Sole traders and partners

If you’re a sole trader or in a partnership, you’re not an employee. You can’t claim Statutory Sick Pay (SSP). You may be able to claim government benefits like Employment and Support Allowance (ESA) or use your own income protection insurance.

Limited company directors

If you’re a director of your own limited company and pay yourself a salary through PAYE, you may be able to get SSP if you earn more than the Lower Earnings Limit. Your company pays SSP, and you can often claim it back from HMRC. If you don’t qualify, you can apply for the same benefits as sole traders.

What sickness benefits can I claim if I'm self-employed and sick?

Three main government benefits support self-employed people during illness:

• employment and support allowance (ESA) if you can’t work because of illness or disability
• personal independence payment (PIP) if you have a long-term health condition that affects daily life or mobility
• universal credit if you have a low income or can’t work

Each benefit has its own rules and payment amounts.

Employment and Support Allowance (ESA)

Employment and Support Allowance (ESA) is a benefit for people whose illness or disability affects their ability to work. Self-employed individuals can claim ESA if their condition prevents or limits their work capacity.

Who can apply:

• Self-employed people
• Unemployed individuals
• Students
• Employees not eligible for SSP

You’ll need to show you can’t work in a government assessment. You can apply for New Style Employment and Support Allowance online.

You can continue working while claiming ESA. This benefit recognises that illness may reduce rather than eliminate your work capacity.

ESA work limits:

• Maximum hours: 16 hours per week
• Maximum earnings: £167 per week
• Business continuity: You can keep your self-employed business running

This means you can keep some income while you get government support.

ESA eligibility requirements:

• Age: Under State Pension age
• Health condition: Disability or illness affecting work capacity
• Employment status: Self-employed or employed
• National Insurance: Sufficient contributions in the last 2-3 years
• Medical evidence: Fit note from your doctor

Check your eligibility:Verify your National Insurance record for any gaps. You can make voluntary contributions if needed.

Personal Independence Payment (PIP)

Personal Independence Payment (PIP) provides ongoing financial support for long-term health conditions or disabilities. You can claim PIP while continuing your self-employed work.

Two PIP components:

• Daily living component: Help with washing, dressing, cooking, managing medication
• Mobility component: Support for getting around due to physical or mental health conditions

Key benefit: PIP doesn't affect your ability to run your self-employed business. Apply for PIP through the government website.

Universal Credit for self-employed people

If you’re self-employed, you may be able to claim Universal Credit. This is a monthly payment to help with living costs if you’re on a low income or can’t work.

To claim Universal Credit when self-employed, your self-employment must be your main income (called ‘gainful self-employment’). You’ll need to report your earnings each month.

The amount you get depends on your monthly income. Universal Credit uses a one-month assessment period. Sometimes, your payment is based on an assumed income called the Minimum Income Floor (MIF). This is what someone your age would earn on the National Minimum Wage. If you earn more, your payment is based on your actual income.

Self-employed income protection serves as a sick pay insurance

Income protection insurance acts as sick pay for self-employed people. It provides regular payments when illness prevents you from working.

How it works:

• Payment amount: Percentage of your average income (typically 50-70%)
• Payment trigger: Sustained illness affecting work ability
• Payment duration: Until you return to work or policy ends

Policy options:

• Long-term cover: Payments until you can return to work
• Short-term cover: 1-2 years of payments

This insurance helps fill the gap between government benefits and your usual income.

You can also get critical illness cover. This pays you a tax-free lump sum if you’re diagnosed with a serious illness, like a heart attack or some cancers. In 2023, insurers paid out around £4.85 billion for illness, injury and bereavement claims.

How to protect yourself in times of sickness if you're self-employed

Planning ahead protects your business during illness. Smart financial management helps you weather unexpected health challenges.

Key planning strategies:

• Track your finances: Monitor income patterns and business expenses
• Forecast cash flow: Predict potential financial gaps during illness
• Build reserves: Set aside funds for emergency periods
• Automate processes: Reduce admin burden when you're unwell

Xero accounting software helps you track your finances and plan for the unexpected. Cash flow forecasting tools show you where your money’s going and when you might face challenges.

Visit the cash flow content hub for more financial planning tips.

Planning your finances when you can't work

If you can’t work, you don’t want to worry about money. Seeing your business finances clearly helps you plan for the unexpected. With Xero, you can stay on top of your numbers, even when you’re taking time off.

Use cash flow forecasting to spot shortfalls and plan ahead. Keep your records organised and up to date so you have everything ready if you need to apply for support. This gives you peace of mind and lets you focus on getting better. See how Xero can help you run your business, not your books.

FAQs on self-employed sick pay

If you’re self-employed, you may have questions about sick pay and benefits. Here are answers to some common questions.

How much sick pay can a self-employed person get?

The amount you get depends on which benefit you claim. For example, ‘New Style’ Employment and Support Allowance (ESA) pays a set weekly rate. Universal Credit is based on your circumstances and household income.

Do I need a doctor's note to claim benefits?

Yes, for most sickness benefits like ESA, you’ll need to give a ‘fit note’ (also called a doctor’s note or sick note) from your doctor. This shows your health condition or disability affects your ability to work.

Can I work while claiming sickness benefits?

Sometimes, yes. The ‘permitted work’ rules let you work up to a set number of hours or earn up to a certain amount while you get benefits like ESA. Check the rules for your benefit to make sure you stay within the limits.