If you were running a creative business in the UK between 2020 and 2022, pivoting was a survival tactic. From the moment the first lockdown was announced, the creative sector was pushed into a unique kind of financial limbo. While the rest of the country was figuring out Zoom backgrounds, you were likely staring at a calendar of cancelled contracts and empty studios.
Key Takeaways
- UK Covid support for creatives was a mix of grants and loans designed to help freelancers and limited company directors survive the pandemic.
- The Self–Employment Income Support Scheme (SEISS) provided five taxable grants, though eligibility criteria tightened significantly as the scheme progressed.
- Limited company directors often faced a financial gap because furlough payments only covered their PAYE salary and ignored dividend income.
- Small businesses could access quick capital through Bounce Back Loans, but these remain 100% debt liabilities that must be repaid over a 6 to 10 year term.
- The 50% rule and the newcomer gap meant that many creative professionals were excluded from government aid entirely, relying instead on personal reserves.
The government did eventually step in, but the support was far from a one size fits all solution. Between the self–employed grants (SEISS) and the furlough scheme (CJRS), thousands of designers, photographers, and agency directors found themselves either saved by a lifeline or falling through a very wide crack in the system.
Table of contents
1. The reality for the self–employed: SEISS 1 through 5
The Self–Employment Income Support Scheme (SEISS) was the government’s primary answer for the freelance community. On paper, it was a series of five taxable grants designed to replace 80% of your average trading profits.
In practice, it was a moving target with shifting goalposts.
The first two grants were relatively straightforward: if your business was adversely affected by the pandemic, you could claim. By the time we reached the third, fourth, and fifth grants, the criteria tightened.
The rollout and the newcomers
The early lifelines covered the initial shock of 2020 based on tax returns from 2016 to 2019. It wasn’t until 2021 that the government finally included those who had filed 2019/20 tax returns, bringing thousands of new creatives into the safety net.
The tax and compliance sting
One of the biggest misconceptions was that these grants were free money.
They were – and are – taxable income.
2. The limited company struggle: Furlough and dividends
If you ran your creative business through a limited company, the pandemic likely felt like a lesson in being too formal for the government’s liking. While freelancers had SEISS, you were pointed toward the Coronavirus Job Retention Scheme (CJRS) – otherwise known as furlough.
The dividend black hole
Most creative directors follow a tax–efficient route: a low PAYE salary topped up by dividends. Because the CJRS only covered 80% of your PAYE salary, those dividends were completely ignored. For many, this meant their support was a fraction of their actual living costs.
Statutory duties and flexible furlough
For a sole director, stopping work is technically impossible.
You still have a legal obligation to file accounts and manage your company. The government eventually clarified that you could furlough yourself and still perform these statutory duties, but you couldn’t do revenue–generating work. From July 2020, Flexible Furlough allowed you to work part–time and claim for the hours you didn’t work, which was the moment many boutique agencies could finally start pitching for new work again.
3. Borrowed time: Bounce Back Loans and CBILS
When the initial grants weren’t enough, the government opened the credit taps. For most small creative firms, this meant the Bounce Back Loan Scheme (BBLS). It was designed for speed: self–certification and 100% government–backed.
The Bounce Back paradox
The BBLS was a double–edged sword. You could get up to £50,000 quickly, but it was 100% debt that you remained liable for. If you used that money for legitimate business purposes like rent or salaries, you acted within the rules. However, the Insolvency Service is currently looking for directors who used funds for personal gain.
Pay As You Grow (PAYG)
If the monthly hit is still stinging your cash flow, the PAYG options allow you to extend the loan term from 6 to 10 years or take interest–only periods. Unlike Bounce Back Loans, CBILS loans over £250,000 often required personal guarantees. Treat this debt as a fixed cost and use the built–in flexibility to avoid a default.
4. The Forgotten creatives and the gaps in support
While the headlines focused on billions in aid, the reality for the creative community was often a story of exclusion.
The 50% rule
The 50% rule was a major hurdle. To qualify for SEISS, more than half of your total income had to come from self–employment. This hit freelance illustrators or photographers who worked part–time PAYE jobs to stay stable.
Timing and structure gaps
Anyone who started their creative business after April 2019 was also essentially invisible for the first year. Directors who relied on dividends were another group that fell through the cracks. For many in the creative sector, the pandemic was survived through personal savings or credit cards rather than government help.
5. Moving forward: Tax implications and HMRC checks
The pandemic might feel like a lifetime ago, but for HMRC, the books are still very much open.
Navigating the aftermath of pandemic–era accounting isn’t something you have to do alone. At WallsMan Creative, we specialise in making sense of the numbers for UK creative businesses, ensuring you’re compliant and clear for the future.
