According to the British Medical Association 6mn people were on hospital waiting lists in November 2021 – a record high that is likely to increase.
More recently, the Office of National Statistics published findings from a survey that revealed an estimated 1.3mn people in the UK – 2 per cent of the population – were self-reporting with long Covid.
These findings demonstrate how important income protection is, particularly for the self-employed who cannot fall back on sick pay. IP is one step towards providing a financial safety net, so if you have any self-employed clients you should talk to them about how they might protect their income in the event of illness.
This article will cover the basics of IP and its importance for the self-employed.
State sickness benefits
In most cases, the self-employed are unable to claim for many of the benefits that employees are entitled to, including statutory sick pay.
If your client is a sole trader or in a partnership they cannot claim SSP, but they may be eligible for employment and support allowance if they have a longer-term illness or disability that means they are unable to work. They would also need to be:
- 16 or over;
- Under the State Pension age;
- Live in England, Wales or Scotland;
- Not claiming job seekers’ allowance;
- Paying enough national insurance contributions.
While there are different types of ESA that people can claim for, most will claim ‘new style’ ESA. For this, your client will need to have been an employee or self-employed over the past two to three years. They also need to have two full tax years of national insurance contributions (or one year of contributions and one year of national insurance credits).
Sick pay for self-employed rates when claiming ESA
If the Department of Work and Pensions accepts a claim, the claimant will get the first payments a few weeks later. Payments will usually be backdated by up to three months to cover the period when the claimant had limited capability to work. However, your clients cannot claim payments for the first seven days they were unable to work.
When they first claim for new style ESA they will initially get the assessment rate:
- £74.70 each week if aged 25 or over.
- £59.20 each week if under 25.
After three months, the DWP will do an assessment. Depending on the illness, they will be on one of the following rates:
- Up to £74.70 a week if able to go back to work.
- Up to £114.10 a week if unable to go back to work.
They may also be able to claim universal credit depending on individual circumstances.
If you compare this to what your clients usually earn, how does it measure up?
What is IP insurance?
