‘Older workers more likely to miss out on support package for the self employed’

Older people who are self employed may be more at risk of missing out on the Government’s support package, according to research from the International Longevity Centre.

It says figures show over 50s are more likely to be self employed than younger workers – 21% as against 12% of under 50s.

Many may miss out on the Government self employment income protection scheme because they are newly self employed or work part time and don’t get most of their income from self employed work, says the ILC.

The income support scheme for self-employed workers provides the equivalent of 80% of their income – up to a maximum of £2,500 a month. However, workers are not eligible for assistance if their annual profits exceed £50,000; if they are newly self-employed, and if they don’t earn the majority of their income from self-employment. Moreover, it says, self-employed workers will have to survive until June, when the scheme is expected to be operational, with little additional protection.

The majority of those aged 60+ (54%) and most of those aged 70+ (72%) work part time, says the ILC. Moreover, older workers may also be receiving retirement income, which counts towards their total income. It also cites figures showing full-time self-employed workers aged 55+ earn less than younger workers, and over £100 a week less than their employed counterparts and it says 23% of self employed older workers are in relative poverty. “They will struggle to get by with no or delayed support except piecemeal offers of Universal Credit,” says the ILC.

It adds that missing out on the income protection scheme “could unintentionally disincentivise longer working lives and further disadvantage the retirement incomes of the self-employed”.

Another issue is that older workers are also likely to be vulnerable themselves or caring for someone more vulnerable to coronavirus alongside these financial pressures. Nearly 60% of carers in England and Wales are aged 50+ and 65% of older carers (aged 60–94) have long-term health problems or a disability themselves.

ILC Research Fellow Sophia Dimitriadis says: “In these troubling times, it’s more important than ever that no one is left behind. But these arbitrary criteria for support risk doing just that. As a growing number of workers transition to self-employment in their later years, we need to ensure they are not forgotten, and feel supported to work for longer and have sufficient savings for retirement.”

“Failing to support workers of all ages to stay afloat in these unprecedented times could not only put individuals’ livelihoods at risk but also exacerbate the effects of a coronavirus-driven recession.”

Winners and losers

Meanwhile, a report from the Institute for Fiscal Studies highlights how many of the self-employed will be left financially better off as a result of the coronavirus crisis, although some will get no support at all. It calculates that a quarter of the self-employed will be financially better off than they would have been without the crisis even if their business shuts completely. This can happen, it says, if the 20% of lost earnings not made up by the income protection scheme is outweighed by benefits or if they would now – even in the absence of the coronavirus – be earning much less than they averaged from April 2016 to April 2019.

However, it estimates that some will miss out on the income protection scheme. These are:

• 1.3 million people with some self-employment income (25% of them) will be ineligible because they received less than half of their income from self-employment.
• 225,000 (4%) will be ineligible because their self-employment profits were more than £50,000 a year
• 650,000 (13%) will be ineligible because they started their business since April 2019

It adds that there is some overlap between these groups, but estimates that, among the 3.8 million people that receive more than half of their income from self-employment, roughly 675,000 will be ineligible for the income protection scheme.

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