Self-employed IVA

What is a self-employed IVA?

A self-employed IVA is a formal, legally binding agreement between you and your creditors that allows you to repay an affordable portion of your debts over time – usually five to six years.

If the arrangement is completed successfully, any remaining unsecured debt will be written off.

How does a self-employed IVA work?

A self-employed IVA works similarly to a standard IVA but is tailored to reflect the realities of running a business.

Instead of juggling monthly payments, you’ll make one monthly payment to an Insolvency Practitioner (IP), who distributes it to your creditors. They agree to freeze interest and stop collection activity once an IVA is in place.

An IVA can cover both personal and certain business-related debts, depending on your circumstances, while still allowing for essential living costs such as food, housing and family needs.

Can I stay self-employed in an IVA?

Many self-employed people can continue trading while in an IVA. Depending on your circumstances, you may also be able to keep essential business assets such as tools, equipment, vehicles and stock.

This is one of the main reasons business owners explore an IVA as an alternative to bankruptcy.

How do I apply for a self-employed IVA?

To get started, we review your business debts and personal circumstances, including income, expenditure, assets and creditors. This can be done over the phone or via email.

Your IP will work with you to prepare a forward-looking cashflow forecast, usually covering the next 12 months. This helps assess whether your business is likely to generate enough income to support a reduced repayment plan.

Your monthly contribution is based on your income after tax and business expenses, while ensuring your essential living costs are covered.

If your income varies – for example, due to seasonal work – payments can sometimes be structured to reflect this, provided the agreed annual contribution is met.

What debts can be included?

This depends on your business structure.

Sole traders

As a sole trader, your personal and business finances are legally linked. This means both personal and business debts may be included in one IVA. This could include business loans, credit cards, supplier debts and HMRC arrears.

Limited companies

A limited company is a separate legal entity. Company debts can’t usually be included in a personal IVA unless you’ve signed a personal guarantee.

If you have personally guaranteed a company debt, this may be included in your IVA. Otherwise, the company remains responsible for its own liabilities.

Benefits

• You may be able to continue trading.
• Essential business assets may be retained.
• Payments can sometimes reflect fluctuating income.
• Interest and charges are often frozen.
• You make one monthly payment.
• Legal action from creditors is usually paused.
• HMRC debts such as VAT or tax arrears can often be included.
• Key supplier relationships may sometimes be maintained.

You may repay less than the full amount owed, depending on your circumstances.

Things to consider

• An IVA will appear on your credit file for six years.
• Your name will be listed on the Insolvency Register.
• IVAs typically last five to six years.
• You may need a new bank account.
• Only unsecured debts can be included.
• Missing payments could lead to the IVA failing.
• IVAs are available in England, Wales and Northern Ireland.

Will my IVA be approved?

Once your proposal is prepared, your IP submits it to your creditors.

If 75% (by debt value) of voting creditors agree, the IVA becomes legally binding for all.

Creditors typically take two to three weeks to make their decision. If the IVA isn’t approved, alternative solutions can be explored.

Who can apply for a self-employed IVA?

A self-employed IVA may be suitable if you:

• are self-employed
• live in England, Wales or Northern Ireland
• are struggling with unsecured debts

This includes professions such as:

• CIS workers
• Freelancers
• Tradespeople
• Landlords
• Retailers
• Childcare providers
• Consultants

Suitability depends on your individual circumstances.

Some regulated professions (e.g. financial services or legal roles) may have restrictions, so it’s important to check with your employer or professional body.

Will it affect my business?

Many people are able to continue trading while in an IVA.

You usually remain in control of your business and may be able to keep essential tools, vehicles and equipment.

Why does cash flow matter?

Your IP may review your business income and expenses and create a 12-month forecast to help ensure any proposed payments are realistic and sustainable.

Will it affect my car or home?

You won’t be required to sell your home. If you own a property with £10,000 or more in equity, you may be asked to make an additional 12 monthly payments instead of releasing equity.

If you own a car worth more than £8,000, you may be asked to switch to a more affordable vehicle so any additional value can be paid into your arrangement.

Before looking at whether an IVA is the right debt solution for you, it’s important that you understand how your assets and property may be affected.

Managing your IVA

You’ll receive ongoing support from your IP throughout your arrangement.

Your IVA will usually include an annual review to reflect any changes in your circumstances.

Access to credit may still be possible in some cases, but you can’t borrow more than £500 without your IP’s approval.

Here, you’ll find more helpful information to support you throughout your IVA.

Self-Employed IVA client reviews

Let’s talk through your options

If you’re self-employed and worried about debt, we can help you understand whether a self-employed IVA is right for you and look at alternative options if it’s not.

Get debt help online or call us on 0800 316 1833 for a confidential conversation.