Guide to sick pay for the self-employed in the UK

Self-employment comes with a lot of perks, like more autonomy and freedom. However, there are some financial safety nets that you miss out on if you’re a sole trader, including Statutory Sick Pay (SSP).

When you work for yourself, you’re responsible for your own self-employed accounting and it’s important to factor unforeseen circumstances into the numbers, such as if you fall sick. Fortunately, there are ways to prepare for these eventualities and safeguard your business.

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

Unfortunately, there isn’t any Statutory Sick Pay (SSP) for the self-employed.

This is because SSP is paid by employers to their employees, and as a self-employed individual you don’t have an employer.

However, there are some other benefits you can claim if you’re unable to work due to disability, illness or injury.

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

Here are several benefits you can claim, depending on your circumstances:

Employment and Support Allowance (ESA)

ESA can be claimed by people who are self-employed, unemployed, classed as a student, or employed but not eligible for SSP. To apply for the New Style Employment and Support Allowance you’ll need to demonstrate that you’re unable to work because of your injury, illness or disability during the assessment process.

Will I have to stop working if I claim ESA?

The good news for self-employed workers is that receiving ESA doesn’t mean you have to put your business on hold, as you can work whilst you claim.

You could be eligible for ESA if you’re able to continue work, but your illness restricts or reduces your ability to do so. Whilst claiming ESA, you’re able to continue to work up to sixteen hours a week and earn up to £167 a week.

Am I eligible for the Employment and Support Allowance?

You can apply for ESA as long as you’re under State Pension age, you have a disability or a health condition that affects how much you can work, and you’re either employed or self-employed.

You’ll also need to make sure you’ve paid enough National Insurance contributions in the last two to three years to access ESA. If you haven’t, you can always check your National Insurance record for gaps and voluntarily fill them.

To help prove that you need access to ESA, you’ll need a ‘fit note’ from your doctor to support your application.

Personal Independence Payment (PIP)

For those living with disabilities or long-term health conditions, you may be able to receive on-going financial support through the PIP.

There are two payment components of PIP: one is for mobility issues and the other is for daily living assistance.

The PIP mobility payment helps those with restricted physical movements to get about in day to day life. The daily living payment is for extra help with activities such as washing, cleaning or dressing.

Receiving PIPs won’t restrict your self-employed business as you’re able to receive such payments and continue to work. You can apply for PIP on the gov.uk website.

Universal Credit for self-employed people

In some cases, self-employed people can claim Universal Credit, a monthly payment to help meet your living costs if you’re on a low income, unable to work, or out of work.

To be eligible and apply for Universal Credit when self-employed, your self-employment should be your main source of income and you’ll need to provide reports on your earnings.

As a self-employed person, the amount you’d receive is based on the monthly income you report, or may be calculated on an assumed level of earnings, also known as the Minimum Income Floor (MIF). This will be based on your age and what an employed person being paid the National Minimum Wage would expect to earn in similar circumstances. If you earn more than someone on a minimum wage then your Universal Credit will be determined by your actual earnings.

Self-employed income protection serves as a sick pay insurance

One of the most nerve-wracking aspects of being self-employed is what might happen if you were to become sick and either have to drop your working hours or stop working altogether. If you’re worried about loss of income in times of sickness then self-employed income protection could be a good option to provide peace of mind.

Self-employed income protection can serve as a type of sick pay insurance. With this cover, you can get regular payments which are a proportion of your average income if you are hit by a sustained illness that affects your ability to work. There are long-term insurance policies that will provide payments until you’re able to return to work, or short term policies which will cover one to two years out of work.

You can also take out critical illness cover to safeguard against serious illnesses such as heart attacks or some types of cancer. This cover is designed to give you one tax-free lump sum if you’re diagnosed with a serious illness to help with large costs like mortgage payments.

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

There are a lot of uncertainties in life, especially when you’re self-employed, so it’s smart to plan ahead to ensure you and your business are covered in times of sickness. Xero’s accounting software for sole traders and the self-employed can help keep you on top of the numbers and plan for any unexpected difficulties.

Cash flow forecasting is also worth exploring, as it can help you foresee any cash flow difficulties, plan for them, and give your business the best chance of maintaining healthy finances. Learn more on our cash flow content hub.