Can You Get an IVA If You Are Self-Employed?
If you work for yourself and you are struggling with debt, you might be wondering whether an IVA self-employed option is available to you. The short answer is yes, self-employed people can absolutely enter into an Individual Voluntary Arrangement. Being your own boss does not disqualify you from this popular debt solution, though there are some additional considerations your insolvency practitioner will need to work through.
This guide covers everything you need to know about getting an IVA when you are self-employed, from eligibility and income assessment to the evidence you will need and how your payments are structured.
What Is an IVA and Can the Self-Employed Apply?
An Individual Voluntary Arrangement is a formal, legally binding agreement between you and your creditors to repay a portion of your debts over a set period, typically five to six years. It is managed by a licensed insolvency practitioner (IP) and, once approved, it freezes interest and charges on the debts included.
There is no employment requirement to qualify. Whether you are a sole trader, a freelancer, a contractor, or a limited company director, you can apply for an IVA. Your employment status does not determine eligibility. What matters is that you have a regular income and owe enough debt to make the arrangement worthwhile. If you are unsure about the debt threshold, our guide on how much debt you need for an IVA explains the typical minimums.
IVA Self-Employed Eligibility: What You Need
The core eligibility criteria for an IVA are the same regardless of your employment status:
- You typically need to owe at least £6,000 in unsecured debt (though some providers set higher thresholds)
- You need to owe money to two or more creditors
- You must be able to demonstrate a regular income, even if it varies month to month
- You need to show that you can afford to make meaningful monthly contributions towards your debts
The key difference for self-employed applicants is proving that regular income. Employed people can simply provide payslips, but if you are self-employed, your IP will need to dig deeper into your finances. For a full walkthrough of the application process, take a look at our guide to applying for an IVA in 2026.
How Self-Employed Income Is Assessed
When you apply for an IVA as a self-employed person, your insolvency practitioner will carry out a thorough assessment of your income. This is not about catching you out: it is about building a realistic picture of what you can afford to repay each month.
Your IP will typically look at:
- Your last two to three years of accounts or tax returns
- Recent bank statements (both personal and business)
- Any contracts or ongoing work agreements
- Your average monthly turnover and profit
- Seasonal patterns in your earnings
From this, they will calculate an average monthly income figure. This average is what your IVA proposal will be based on. If your income fluctuates significantly, your IP may build in a buffer or include a variation clause in your arrangement, which we will cover shortly.
Dealing with Variable Income
One of the biggest concerns for self-employed people considering an IVA is the reality of variable income. You might earn well one month and very little the next. This is completely normal for freelancers, tradespeople, and seasonal businesses, and the IVA process accounts for it.
There are a few ways this is typically handled:
Averaged payments: Your IP calculates an affordable monthly payment based on your average earnings over a reasonable period. This smooths out the peaks and troughs.
Variation clauses: Many IVA proposals for self-employed people include a clause that allows payments to flex up or down depending on your actual income. If you have a quiet month, your payment reduces. If you have a bumper month, you may pay a bit more.
Annual reviews: Your IP will conduct an annual income and expenditure review. If your circumstances have changed significantly, your payments can be adjusted. This protects both you and your creditors.
Payment holidays: In some cases, if your business hits a genuinely difficult patch, you may be able to take a short payment holiday. This is not guaranteed, but a good IP will work with you rather than letting the arrangement fail.
The important thing to understand is that an IVA is designed to be affordable. No one benefits if the payments are set so high that you cannot maintain them.
What Evidence Will You Need to Provide?
Self-employed IVA applicants typically need to gather more paperwork than employed applicants. Your IP will usually ask for:
- Self-assessment tax returns for the last two to three years
- Business accounts (profit and loss statements, balance sheets)
- Three to six months of business and personal bank statements
- Details of any business assets (vehicles, equipment, stock)
- A list of all your debts, including business and personal
- Proof of regular business expenses
- Any contracts or letters of engagement with clients
If you use an accountant, they can often help pull this together. Having organised records makes the process smoother and faster. Not sure which debts would be included? Our guide on what debts are included in an IVA breaks it all down.
How IVA Payments Work When You Are Self-Employed
Once your IVA is approved by your creditors (this requires 75% by debt value to vote in favour), you will start making regular monthly payments. These go to your IP, who distributes the funds to your creditors.
For self-employed people, the payment structure might look slightly different to a standard IVA:
- Payments are based on your average disposable income after essential living costs and business expenses
- Business expenses are treated as a priority, so your ability to keep trading is protected
- If you have business assets, these may need to be disclosed, but essential tools and equipment are usually protected
- Your IP will factor in tax liabilities (self-assessment payments) as a necessary expense
The arrangement typically lasts five to six years. At the end, any remaining debt included in the IVA is written off. You can read more about what happens when you reach the finish line in our post on 5 things that happen at the end of an IVA.
Can You Keep Running Your Business During an IVA?
Yes. Unlike bankruptcy, which can place restrictions on running a business, an IVA allows you to continue trading. This is one of the key benefits of an IVA for self-employed people.
You can:
- Continue operating your business as normal
- Take on new clients and contracts
- Maintain your professional reputation (an IVA is not published in a public register that clients would typically check)
- Keep essential business assets
There are some restrictions, though. You will need to inform your IP before taking on any new significant credit, and any major changes to your business (such as forming a new company or taking on a business partner) should be discussed with them first.
Tips for a Successful IVA When Self-Employed
Based on how self-employed IVAs typically work, here are some practical tips to give yourself the best chance of success:
Keep your records tidy. The better your financial records, the smoother your application and annual reviews will be. Use accounting software or work with a bookkeeper.
Be honest about your income. It can be tempting to overstate earnings to appear more stable, or understate them to reduce payments. Neither helps. Your IP needs an accurate picture to build a sustainable arrangement.
Separate business and personal finances. If you have not already, open a dedicated business bank account. This makes it much easier for your IP to assess your situation and for you to track what is business expenditure versus personal spending.
Communicate with your IP. If your income drops significantly or your business circumstances change, tell your IP early. They can often adjust the arrangement before things become a problem.
Plan for tax. Make sure your self-assessment payments are factored into your IVA budget. Falling behind on tax while in an IVA creates new debt, which is the last thing you need.
Build a small emergency buffer. Discuss with your IP whether you can keep a modest reserve for business cash flow. Many IPs understand that self-employed people need some working capital.
Alternatives to an IVA for Self-Employed People
An IVA is not the only option. Depending on your circumstances, you might also consider:
Debt Management Plan (DMP): An informal arrangement where you make reduced payments to creditors. Less rigid than an IVA, but creditors are not legally bound to the terms and can still chase you.
Bankruptcy: A more drastic option that writes off your debts, but it can affect your ability to run a business and may result in losing assets. Our comparison of IVA vs bankruptcy explains the differences in detail.
Debt Relief Order (DRO): Only available if your debts are under £30,000, your assets are minimal, and your disposable income is very low. Not suitable for most self-employed people with active businesses.
Full and final settlement: If you have access to a lump sum (perhaps from family or savings), you may be able to negotiate a one-off payment to settle your debts for less than the full amount owed.
Each option has pros and cons, and the right choice depends on your specific situation. Speaking to a debt adviser is the best way to understand which route makes sense for you. You can also read more about how to apply for an IVA if you decide that is the right path.
Get Help with Your Debt Today
If you are self-employed and struggling with debt, you do not have to figure this out alone. Getting professional advice early gives you the best chance of finding a solution that works for both you and your business.
At Swift Debt Help, we can connect you with experienced advisers who understand the unique challenges of self-employment and debt. Fill in our contact form to get started, or give us a call to discuss your options. There is no obligation, and all initial consultations are free.
Disclaimer: The information in this article is for general guidance only and does not constitute financial advice. Every individual’s circumstances are different, and you should seek professional advice before making any decisions about debt solutions. Swift Debt Help is not a financial adviser. We connect people with licensed, regulated professionals who can assess your situation and recommend appropriate solutions.