Yes — Self-Employed People Can Have an IVA
Being self-employed does not prevent you from entering into an IVA. In fact, IVAs are relatively common among self-employed individuals and sole traders, particularly those who have accumulated tax debts alongside personal unsecured debts.
Handling Variable Income
Because self-employed income can fluctuate month to month, your IP will typically calculate your average monthly income over the past 6–12 months to establish an appropriate monthly contribution. Your IVA may also include an annual review mechanism that adjusts payments based on your actual earnings each year — if you earn more, you pay more; if less, you pay less.
Some IVAs for self-employed individuals use a 50/50 windfall clause — if you earn significantly more than the average in any year, 50% of the excess above a threshold goes into the IVA.
Including Business Debts
If you are a sole trader (i.e., you personally are liable for your business debts), both personal and business unsecured debts can be included in the same IVA. Common business debts included are:
- HMRC (income tax, VAT, National Insurance)
- Business loan or overdraft (where personally guaranteed)
- Trade creditor debts (if personally liable)
Continuing to Trade
An IVA does not automatically prevent you from continuing to trade as a sole trader. However, you may need to consider whether any suppliers or trade accounts will be affected if those creditors are included in the IVA. Speak to your IP about how to manage ongoing business relationships during the IVA.
Limited Company Directors
If you operate through a limited company, the company itself is a separate legal entity and its debts cannot be included in your personal IVA. Only personal debts and any business debts you have personally guaranteed can be included.
Free debt advice: For personal advice tailored to your situation, contact MoneyHelper (0800 138 7777), StepChange (0800 138 1111), or Citizens Advice — all free, all regulated.