25 February 2025
Self-employed sick pay: key advice and info
7 minutes
Coming down with an illness, injury, or other health condition is stressful for anyone — let alone those who work for themselves. Self-employed sick pay can be less straightforward than sick pay for employees, but there are still a few options.
In this guide, we’ll take you through what’s available so you’ll know where to turn.
Can you claim sick pay if self-employed?
There are avenues to financial support that we’ll cover in this article. But we first want to acknowledge the challenges self-employed workers face in accessing sick pay.
Can self-employed people claim Statutory Sick Pay?
Unfortunately this isn’t an option for the self-employed. Statutory Sick Pay (SSP) is paid by employers to their employees. Employees can get SSP for up to 28 weeks and are eligible after three consecutive days of sickness (including non-working days). But as self-employed people aren’t employees, they’re not entitled to SSP and must find other options.
Other challenges faced by the self-employed when sick
- Lack of employer support: this doesn’t just relate to SSP but all the other aspects of support employees receive from employers. This includes things like finding cover for their responsibilities and supporting a phased return to work.
- Financial implications: if you’re the only person working for your business, it’s likely that most, if not all your income will stop while you’re unwell. This isn’t the case for larger businesses where other employees will keep working. See below for more on how to prepare for the financial implications of illness while self-employed.
Read more: Self-employed insurance
Now that we’ve covered the challenges, let’s look at the options.
Can I claim ESA if self-employed?
In short, yes! In fact, Employment and Support Allowance (ESA) is the most common option for claiming sick pay if you’re a sole trader or partner.
How does ESA work?
ESA is a regular, fortnightly payment you can receive if an illness, injury, or disability is impacting your ability to work. One of the benefits of ESA is that it doesn’t just apply to those who aren’t able to work at all, but also to those who can still do some work, just less. You’ll also receive Class 1 National Insurance credits while on ESA.
To be eligible, you must:
- Be 16 or over.
- Be below State Pension age.
- Have made enough National Insurance contributions (including up to one year of credits) in the past two full tax years.
- Not be receiving SSP or Jobseeker’s Allowance.
- Only do “permitted work,” which means working no more than 16 hours and earning no more than £183.50 each week.
- Have a “fit note” from a healthcare professional, such as your GP, to demonstrate that you have a health condition impacting your ability to work.
Note that ESA is available throughout the UK except Northern Ireland.
Different types of ESA
- New Style Employment and Support Allowance: this is the main type of ESA available. Any new claims will fall under New Style ESA.
- Contribution-based Employment and Support Allowance: this is an old type of ESA that’s no longer available. But some self-employed people will still be receiving contribution-based ESA if they started on it before the New Style was introduced.
- Income-based Employment and Support Allowance: this is another old style of ESA. You can’t make a new claim for it, but if you’re receiving contribution-based ESA, you can potentially add income-related ESA to it. You’ll receive whichever amount is higher, so it’s definitely worth considering.
How much is ESA?
New Style and contribution-based ESA
It can take around 13 weeks for the Department for Work and Pensions (DWP) to process your claim. But you’ll still receive financial support while you’re waiting, called an “assessment rate”:
- Under 25s: up to £71.70 a week.
- Ages 25+: up to £90.50 a week.
If your claim is accepted, you’ll be assigned to one of two groups: the work-related activity group and the support group. The former is for people who are still able to work to some extent or who’ll be able to return to work in the future. They can receive ESA for up to a year. The latter is for people who aren’t able to work again. They can receive ESA indefinitely.
- Work-related activity group: up to £90.50 a week.
- Support group: up to £138.20 a week.
If your claim takes longer to process than 13 weeks, your pay will be backdated once you’re assigned to a group. Until then, you’ll keep receiving the assessment rate.
If you’re receiving a private pension income of over £85 a week, half of whatever you receive over this £85 limit will be deducted from your ESA. Or you might not be eligible for ESA at all if your pension income is sufficiently high.
Income-based ESA
Income-related ESA is more complicated to calculate as it depends on a variety of factors. Generally speaking, it works as follows:
Basic amount + premiums - income - savings/property = income-based ESA
- Basic amount: these rates are exactly the same as for other ESAs, unless you live with a partner. In this instance, the assessment and work-related activity group rates are both £142.25 a week, and the support group rate is £189.85 a week.
- Premiums: these are additional amounts you can receive, for example an enhanced disability premium or a carer premium.
- Income: DWP might deduct money based on your income, for example if you earn more than a certain amount, if your partner has an income, or if you receive other benefits.
- Savings/property: if you and your partner’s savings, including property you own besides your home, total more than £6,000, DWP will deduct money from your ESA.
We won’t go into loads of detail here given that New Style ESA is the main type. But to find out more about how income-based ESA is calculated, you can check out Citizens Advice.
What benefits can I claim if I'm self-employed?
Another potential option is to claim Universal Credit (UC). UC is a monthly benefit payment and supports those with low incomes, especially people with health conditions and disabilities. You can receive UC instead of or potentially as well as New Style ESA. If you get both, the amount of ESA you get will be deducted from your UC.
To be eligible, generally speaking you must:
- Be over 18.
- Be below State Pension age.
- Have less than £16,000 in savings (combined with any partner’s savings).
You can claim UC if you can’t work due to a health condition, but you can also claim it while working normally if your income is low enough.
How much is UC for self-employed people?
For self-employed workers, UC is usually calculated based on what’s called a “minimum income floor.” This is what someone earning minimum wage would make in a similar situation. It’ll normally apply if you’re “gainfully self-employed,” which means that self-employment is your primary source of income, that you regularly get work, that you have accounts or invoices and receipts, and that you expect to make a profit.
You’ll need to provide monthly reports on your income and expenses to receive UC. If these show that you’re actually earning more than the minimum income floor, the government will base your UC on what you make in reality. If you’re earning less, UC won’t make up the difference, so you might need to consider taking on other work.
However, if you fall ill, this minimum income floor may be removed. Payments will then be based on what you’re actually earning, if anything, below the floor. For this to happen, you’ll need to complete a Work Capability Assessment and be placed into the “limited capability for work” (LCW) or “limited capability for work-related activity” (LCWRA) group.
Other types of sick pay for the self-employed
Personal Independence Payment
If you live with a long-term health condition or disability, you could well be eligible for a Personal Independence Payment (PIP). Again, this applies whether you’re unable to work at all or have a reduced capacity to work. You can receive PIP alongside ESA and other benefits. To be eligible, you must be aged 16 to 64.
There are two aspects to PIP:
- Mobility payments: these are for people with mobility issues who struggle to move around, up to £75.75 a week.
- Daily living payments: these are for people who need support with activities such as getting dressed and cleaning, up to £108.55 a week.
Sick pay for company directors
If you run your own business as a company director, you’ll be employed by your company like any other employee, and therefore you should be entitled to SSP. To be eligible, you must have worked under an employment contract and earn over £123 a week on average. Your SSP will be £116.75 per week, up until the 28 week limit. If you’re still unwell at this point, you could then claim New Style ESA.
Income protection insurance
While it’s good to have access to government assistance, if you become unwell and then have to apply for support, this can create added stress. This is where income protection insurance comes in, because it prepares you for illness ahead of time.
If you can’t work, your insurance provider will supplement a proportion of your income during this period. Usually this will be about half to two-thirds of your usual income. Generally speaking, you’ll be able to start receiving payments after four weeks of sick leave. Shorter term policies will cover you for one to two years. Longer term policies will keep paying you either until you’re able to get back to work or until you retire.
If you’re interested in taking out income protection insurance, find out more about what we offer and speak with our team of trusted advisors today.
Critical illness cover is another, usually lower-cost option that protects you if you develop a life-threatening or debilitating condition. It can either be paid as an income or as a lump-sum. Find out more about critical illness insurance.
Other ways to prepare for sickness if you’re self-employed
It’s worth thinking about other ways to prepare, especially if you decide income protection insurance isn’t for you.
- Savings: consider building up some savings to cover you in case you become unwell. Put a little away each month and you’ll soon build up a reasonable fund that provides peace of mind.
- Outsourcing: if your business needs to keep running while you’re off sick, have a plan for how you’ll cover your work. For example, you might want to build up a network of freelancers and contractors who you can outsource work to if needed.
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Are you looking for insurance cover to support your business? Get in touch with us! A member of the Howden team would love to help you find the perfect policy!