Covid 19 – what support is there available if you are self-employed?

Self-Employment Income Support Scheme

As we enter another week of lockdown, we are facing increasingly challenging and worrying times, especially if you work for yourself.

While the government has come up with a number of different ways to help businesses, it can be difficult to know which schemes are most appropriate for your personal situation.

Over the last few weeks, we’ve taken numerous calls from those of you who are classed as ‘self-employed’ asking what support is available to you.

We answer some of the most common questions. 

What is the Self-Employment Income Support Scheme?

If you make most of your income from self-employment, have an income of £50,000 or less, and have been adversely affected by coronavirus, you may be eligible for the Self-Employment Income Support Scheme.

The scheme pays self-employed people, including freelancers and sole traders,  a taxable grant worth 80% of their average income over the last three years, up to £2,500 per month, for at least three months.

Capped at £7,500 in total, the grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.

If you do get the grant you can continue to work or take on other employment or voluntary work.

You can check if you are eligible and how HMRC will work out how much you will receive, but HMRC  will be contacting you directly to invite you to apply online. 

While we are happy to advise on how to fill out any forms, HMRC are stating you must make the claim yourself. If you ask your accountant to claim on your behalf, this will trigger a fraud alert and will delay any payment.

UPDATE: Self-Employment Income Support Scheme extended

On 29th May, the Chancellor announced that the Self-Employment Income Support Scheme has been extended to include a second grant.

This second grant will be worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

The scheme will be open for applications in August.

What’s happening about self-assessment payments?

If you’re self-employed, you’ll need to submit a self-assessment tax return and pay your tax bill either fully by 31 January or by using payment on account where you pay in two instalments – one by the end of January and one by end of July. 

The good news is any tax payments due in July 2020 can now be deferred until January 2021.

Is there any help with VAT?

If you are VAT registered, and have a payment due between 20 March 2020 and 30 June 2020, you now won’t have to make a payment until 31 March 2021.

Are there any loans available if you are self-employed?

Yes, if you are self-employed you can apply for the following:

  • Coronavirus Business Interruption Loan Scheme: this government initiative aims to help small businesses affected by coronavirus to access finance. You can borrow up to £5 million and won’t have to pay interest or make any repayments during the first 12 months.  For more information on the loan and to find a lender, take a look at this resource

  • Coronavirus Bounce Back Loan: for amounts between £2,000 and £50,000 a bounce bank loan would be worth considering. The government will guarantee 100% of the loan and for the first 12 months you won’t have to pay any fees, interest or make any repayments. Take a look at more information on the scheme.

Is there any other help available?

If your work has dried up and you have savings of less than £16,000 you might be able to claim Universal Credit.

Also, the government has launched the ‘New Style’ Employment and Support Allowance which you can apply for if one of the following applies:

  • you or your child might have coronavirus or you’re recovering from it
  • you or your child are self-isolating because you came into contact with someone who might have coronavirus
  • you have been told to stay at home for at least 12 weeks by the NHS because you’re at high risk of severe illness

You could also be eligible for the normal Employment and Support Allowance if you’re under state pension age and have a disability or health condition that affects how much you can work.

Find out more

The government has put together a useful support finder, so you can find out what

support you might be entitled to, but if you do have any questions about your personal circumstances, please get in touch. We’re here to help support you through these challenging times and provide advice on how you can keep your business going.

Stay safe.

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