If you’re injured in an accident and can’t work for a time, it can put a lot of pressure on your finances. Compensation can help cover your lost earnings, but can you claim compensation to cover the shortfall if you’re self-employed?
If you’re a self-employed worker who’s facing lost earnings, here we’ll explain how to prove loss of earnings. We’ll look at the evidence you’ll need and the other financial losses you can claim. We’ll also explain how we can help you claim personal injury compensation as a self-employed worker.
Can self-employed people claim for loss of earnings?
Yes, if you’re self-employed, you can claim for lost earnings if an injury prevents you from working. In order to claim compensation, you’ll need to provide evidence of your typical earnings before the injury and show how your income has been impacted by it.
Unlike salaried employees, who can do so simply by providing payslips, proving loss of earnings as a self-employed worker can be more complicated. You may experience fluctuating earnings and may work inconsistent schedules, with some periods busier than others. This makes it essential to maintain accurate financial records to support your claim.
What evidence do you need to prove lost earnings?
To strengthen your loss of earnings claim, you should provide the following documents:
- Income tax returns: Ideally, three years’ worth of self-assessment income tax returns to show income trends.
- Profit and loss accounts: To demonstrate your business’s performance and earnings.
- Invoices and receipts: To prove your income from clients and your level of business spending.
- Bank statements: To demonstrate your earnings and deposits, as well as their timing.
- Accountant statements: If you have an accountant, they can provide an independent verification of your earnings.
- Contracts or client correspondence: Especially contracts or exchanges that demonstrate missed work or lost opportunities due to your injury.
If your business is new and you don’t have three years of financial records, you can provide alternative evidence that estimates your earnings. This could include signed contracts, offers of work, and projected income reports.
How do solicitors calculate loss of earnings for the self-employed?
Our solicitors at Injury Lawyers 4u will consider several factors when calculating your lost earnings as a self-employed worker, including:
- Average past earnings: A common method is to calculate your average monthly income over the past three years using tax returns, invoices, and bank statements (your total income from three years, divided by 36 months).
- Seasonal fluctuations: If your income consistently varies throughout the year, we can make adjustments to your average past earnings to reflect this, especially if you’re injured during a period when your earnings are traditionally higher.
- Extra hours worked post-injury: If you’ve worked additional hours to make up for lost time, this may be factored into the compensation calculation.
The courts aim to fairly compensate claimants, ensuring your losses are neither overestimated nor underestimated. If you have the right evidence and the support of a good solicitor, you should be fairly compensated for your losses.
Can you claim for future loss of earnings?
Future loss of earnings applies when an injury has long-term consequences that prevent you from returning to work at full capacity or force you to take a lower paid job. Solicitors estimate future losses by assessing:
- Your past earnings history: This provides a baseline for predicting your potential future income.
- Your career trajectory: Considering your expected professional development and growth in future earnings.
- Years until retirement: To give an idea of how many years you could experience lost earnings.
- Industry factors: Sector-specific considerations for your particular industry that will affect your earnings can also be made.
What if your income varies month to month?
Earnings that fluctuate each month can complicate a lost earnings claim, but they won’t necessarily prevent you from seeking compensation as a self-employed worker. Rather than calculating lost income on a month-by-month basis, solicitors typically use an annual average to demonstrate financial trends, such as your average monthly income over a three-year period (your total income from three years, divided by 36 months).
Providing at least three years of financial records is a great way to help establish a reliable pattern of earnings over time, proving lost income after injury in a way that will strengthen your claim.
What other financial losses can you claim for?
Beyond lost earnings from work, you may also claim for additional financial losses related to your injury, including:
- Pain and suffering: Compensation is paid to cover both the physical and psychological harm caused by an injury.
- Loss of business opportunities: Covering compensation for cancelled contracts or missed projects.
- Medical expenses: Including the costs of private treatment, therapy, rehabilitation, and prescriptions.
- Travel costs: such as expenses for travel hospital visits and specialist appointments.
- Home adaptations: Permanent injuries may require you to make changes to your living and/or working spaces.
How can Injury Lawyers 4u help?
At Injury Lawyers 4u, we have extensive experience in handling self-employed loss of earnings claims.
If you’re self-employed and are facing a loss of earnings due to an injury, we can help you make a compensation claim and support you through each stage of the process. From gathering financial evidence and accurately calculating loss of earnings to negotiating with insurers to secure the maximum compensation you deserve, we’re there every step of the way.
Proving loss of earnings as a self-employed individual may seem daunting, but with the right evidence and legal support, you can recover the income you’ve lost and protect your business, prosperity, and future. If you need assistance with your loss of earnings claim, contact Injury Lawyers 4u today for a free consultation. Call us on 0333 400 4445 or complete a contact form and we’ll get back to you quickly.