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Coronavirus – Help for the Self-Employed

23 March 2020
Gavin Hooker
COVID-19, Accounting & Compliance, Payroll, People, Raising Finance, Property Investors & Developers

The Chancellor has set out a package of temporary, timely and targeted measures to support businesses through this period of disruption. Please check out our 10 point action plan for businesses. There is potentially support in the form of increased business rates relief, grants for the smallest businesses with business units assessable under business rates, VAT deferment of payments, time to pay arrangements for existing tax liabilities and support via government loans.

We also strongly recommend you speak to your bank, credit card providers, mortgage company and any other financial institution you have debt with and ask for payment holidays or increased facilities. Most will be obliging at this difficult time!

Self-employment Income Support Scheme

Until Thursday 26th March, unless you were ill there was no major help for the self-employed who were healthy but unable to work as a result of COVID-19.

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a taxable grant to self-employed individuals or partnerships. The first part of this scheme will be worth 80% of their profits up to a cap of £2,500 per month, with the second and final part of the scheme based on 70% of profits up to a cap of £2,250 per month.

HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The first part of the scheme will cover the months of March, April and May, with people able to make their claim until 13 July 2020.

The second part of this scheme will cover the months of June, July and August, with people able to make their claim in August 2020. It is understood that you will not have needed to claim under the first part of the scheme to receive a grant under the second part. More guidance from the government will be available on the second part of this scheme on 12 June.

Am I eligible?

To be eligible for the scheme you must meet all the criteria below:

  • Be self-employed or a member of a partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement (26 March 2020) to do so;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020 to 2021
  • Have trading profits of less than £50,000 and more than half of your total income comes from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total taxable income in 2018/19
    • Your average trading profits and total taxable income across up to the three years between 2016-17, 2017-18, and 2018-19.

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted a Self Assessment tax return for all 3 years, HMRC will work out your average trading profit based on continuous periods of self-employment, which will be:

  • the tax year 2017 to 2018 and 2018 to 2019
  • the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017.

If you have amended a submitted a return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.

To check if you are eligible for this scheme, you can use HMRC’s tool here. All you’ll need is your Unique Tax Reference and National Insurance number.

Important – If you do not have a Government Gateway account you will not be able to make a claim. Follow the link above to check your eligibility and then register for a gateway account in time for the claim portal’s opening.

Income Tax

If you owe Income Tax payments in July 2020 under the Self-Assessment system, these will be deferred to January 2021.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in this deferral period. The deferral applies to all taxpayers who need to make July instalment payments – not just the self-employed.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of the coronavirus and have outstanding tax liabilities. If you need assistance with any Time to Pay arrangements, please contact us.

Universal Credit

If you have COVID-19 or are advised to self-isolate, you can now more easily make a claim for Universal Credit. Universal Credit “standard allowance” will be raised by £1,000 for the next 12 months, with working tax credits increased by the same amount.

If you are already claiming Universal Credit and you have COVID-19 or are advised to self-isolate, the requirements of the Minimum Income Floor will be temporarily relaxed. This change took effect on 13 March 2020 and will last for the duration of the outbreak to ensure that self-employed Universal Credit claimants will receive support.

If you need to claim Universal Credit but have COVID-19 or are self-isolating, you will now be able to claim and access advance payments upfront without needing to attend a JobCentre.

Employment and Support Allowance (ESA)

If you are eligible for the new style ESA, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to self-isolate.

We understand that the claims are not significant. This should result in a self-employed person receiving the same as an employed person with SSP, £94.25 per week!

What if I employ staff but cannot afford to keep them on?

You can apply for grants from the government under the Coronavirus Job Retention Scheme of 80% of your employee’s salary package up to a maximum of £2,500 per month. For more information see our blog here.

What if I own a rental property, what help is there for me?

If your tenant is experiencing financial difficulties because of COVID-19, you may be entitled to a mortgage holiday for 3 months:

  • the government has agreed with mortgage lenders that they will offer repayment holidays of 3 months to landlords whose tenants are experiencing financial difficulty due to COVID-19
  • the offer of a payment holiday can be made available to customers who are up to date with payments and not already in arrears
  • customers who are concerned about their current financial situation should contact their lender at the earliest possible opportunity to discuss if this is a suitable option for them
  • emergency legislation will be taken forward so that landlords will not be able to start proceedings to evict tenants for at least a three month period. This applies to private and social renters
  • at the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

We will update this guidance as further announcements are made.

Other help for the self employed

If things get really desperate we attach links to two other websites which may be able to assist:

Citizen’s Advice

Emergency Funding

We are here to support your business. If you have any concerns please call us or email Mark or Andrew.

The content in this blog is correct as at 01/06/2020. See terms and conditions.

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