Self-employed IVAs, Question by Question
How an IVA is tailored to self-employed income and debts.
Can self-employed people have an IVA?
Yes, absolutely, and it is a very common route. Being self-employed, whether a sole trader, freelancer or contractor, does not stop you having an IVA. In fact, for many self-employed people in debt it is the preferred option, because it lets them keep working and earning while dealing with what they owe. The process is tailored to fit how self-employed income and debts work.
Can I keep trading?
Yes, and that is the main appeal. An IVA is designed to let you carry on running your business throughout, since your trade is how you fund the arrangement. This is a major advantage over bankruptcy, which can put your livelihood, your tools, contracts or business at risk. With an IVA, you keep working, keep your income, and pay what you can afford from it.
Can business and tax debts be included?
Yes. As a sole trader your business debts are personal debts, so money owed to suppliers and trade creditors can go into your IVA. Tax debts you are personally liable for, income tax, National Insurance and VAT owed to HMRC, can usually be included too. This is one reason an IVA suits many self-employed people, it can pull personal, business and tax debts into one arrangement.
How is my income assessed?
Through your accounts and a forward projection. Because self-employed income varies, your supervisor looks at your recent accounts and a cash-flow projection, often covering twelve months, to set a fair, affordable monthly payment. It is a bit more involved than for an employee on a fixed salary, but it is well-established. Annual reviews then keep your payment in line with how trade actually goes.
Will I keep my tools and equipment?
Normally, yes. The tools, equipment and assets you genuinely need to do your work are protected in an IVA, because taking them would stop you earning and funding the arrangement. This matters greatly for tradespeople and other self-employed workers. Only genuinely surplus or high-value assets you do not need to trade might be looked at; the essentials of your livelihood are kept.
Do I have to keep up with my current tax?
Yes, this is important. While past tax debts can be included, you must keep up to date with tax that falls due during the IVA, your ongoing income tax, National Insurance and VAT. Falling behind on current tax while in the arrangement can cause it to fail. Budgeting for tax as you go, often by setting money aside, is a key part of making a self-employed IVA work.
What if I have good and bad months?
That is expected, and built in. Self-employed income naturally rises and falls, and IVAs for the self-employed are designed with this in mind. Payments are based on a realistic average from your projections, and reviews adjust them over time. If trade dips significantly, your supervisor can look at reducing payments or arranging a break, rather than the arrangement collapsing at the first quiet month.
Why might an IVA suit me better than bankruptcy?
Because it protects your livelihood. Bankruptcy can threaten the very things a self-employed person depends on, your tools, certain contracts, and in some cases the ability to trade, and may involve more loss of control. An IVA is built to keep you trading, keep your essential assets, and deal with your debts from your income. For many self-employed people, that makes it the gentler, more workable option.
Should I get advice?
Yes, and ideally from a provider used to self-employed cases. Self-employed IVAs involve projections, tax planning and sometimes business banking, so it helps to work with an adviser experienced in them. A free initial conversation can tell you whether an IVA fits your situation and how it would protect your business. It costs nothing, and getting the right advice early makes the arrangement far more likely to succeed.
