Sick pay for self-employed in the UK explained

When you set up your own business, how you manage financially when you’re sick probably isn’t top of your ‘to do’ list. But it’s very likely, at some point in your self-employed career, that you’ll need to take time off work due to illness.

Unlike employees, you don’t qualify for Statutory Sick Pay. Which means you’ll have to look elsewhere for financial support. Many self-employed people rely on savings, benefits, or returning to work early before fully recovering from illness due to financial pressure. However, these options are not sustainable in the long term. Many households need two incomes to function. And if you’re seriously ill or injured, you just can’t keep working.

So, it’s important to have an alternative financial safety net when you’re self-employed. In this article, we take a look at these alternatives and explain sick pay for self-employed people.

Self-employed sick pay options in the UK

There are several options open to you if you need to replace income lost through being sick. You can apply for certain benefits from the state or fall back on your own savings for example. But one of the most effective ways to secure your financial security is through income protection insurance. 

Income Protection Insurance

Income protection insurance provides a regular tax-free monthly income if you become ill or injured and, as a result, cannot work and lose your working income.

The illness or injury you have will need to meet the criteria set out by the insurance company. Most income protection policies cover injuries such as back pain and broken bones. They also may cover severe mental health conditions, and illness like cancer, heart disease and stroke that result in incapacity preventing you from working.

After a successful claim, you’ll receive a monthly payment until you return to work, retire, die, or the policy ends – whichever comes first. You can usually expect payout amount up to 60% of your gross salary, depending on how much you earn. You won't usually need to pay income tax on this amount, so it should be enough to cover your everyday outgoings.

The insurance can help to meet your living expenses, such as rent or mortgage payments, and utility bills. But it’s important to know that there are some things it can’t be used for. Such as business costs. Things like office space or your suppliers’ invoices. And you may not be able to use lump sum income protection payments to pay off large debts such as a mortgage. The payouts are for regular monthly personal expenses.

When you set up your plan you can choose to defer taking payments for a period of time, which can be for several months. This will usually make the cost of your cover cheaper. Then, when you make a claim, your payments will start after this deferred period.

The overall cost of your cover depends on things like:

• your age,
• the type of job you do,
• how long you want cover in place,
• your current health and lifestyle,
• your chosen deferred period.

If you’re self-employed, it’s worth considering this type of insurance if:

• You have limited savings. Do you have enough savings to pay for your essential outgoings until you can go back to work? If not, income protection insurance could bridge the gap.
• You have a family or dependents. Do your partner or children rely on your salary? Income protection insurance could help to take care of them while you’re getting better.
• You have outstanding debt. Are you currently paying off any credit cards or loans? You could use some of the money you receive from income protection to keep on top of these payments.

Read more: What is income protection insurance and why you need it?

Savings and emergency funds

If you’ve built up a pot of savings over your career, then you can always use this money to support you if you become unwell and can’t work for a month or more.

But of course, this is only possible if you have the funds available.

And as many self-employed careers don't provide a steady income stream, relying on savings to tide you over can be a risky strategy. Plus, you never know how long you’ll be out of action.

If you’re using your savings as your financial support, it’s a good idea to have 3-6 months’ worth of outgoings as your emergency fund. To build up your fund, automatically transfer a percentage of your earnings into the fund when you get paid. And any unexpected windfalls, such as a tax rebate, could be considered rainy day money too.

Employment and Support Allowance (ESA)

You can apply for this allowance if you have a disability or health condition that affects how much you can work. To qualify, you’ll need to be under state pension age and have paid enough National Insurance contributions in the last 2-3 years.

How much you get will depend on your age and whether you can get back to work. While your application is being assessed you’re eligible for payment. You can continue to work and claim ESA as long as you work less than 16 hours a week.

Read more: Employment and Support Allowance (ESA), Gov.uk

Universal Credit for self-employed people

Universal Credit (UC) is designed to help if you’re on a low income, unable to work or out of work. You can be self-employed and claim UC if you’re unable to work because of illness or injury.

To make a claim, you need to show that self-employment is your main work. Your monthly UC payment is based on the earnings you report each month. There is a ‘minimum income floor’. This is the amount of money an employed person in a similar situation to you would earn on the National Living Wage or National Minimum Wage. When you apply for UC, you’ll find out what your minimum income floor is at your self-employed appointment. If you earn more than that amount, your UC will be calculated using your actual earnings.

If your actual earnings fluctuate, UC will look at your earnings over many months and work out a consistent payment. If you’re not earning because you are unwell, then this loss is carried over until you get back into profit.

1 Source: Gov.uk, Statutory Sick Pay (SSP), April 2025

* Payouts can be boosted by up to 20% for the first 6 months of your claim when you reach Silver Vitality status or above. The booster amount is based on your Vitality status at point of claim.

** To guarantee your benefit amount for earnings between £1,500 and £8,000, you can verify how much you earn by giving us financial information within the first six months of the plan.

*** Eligible claimants only. Claimants must be making a cancer, musculoskeletal, neurological or mental health claim. Access provided by claims assessor.