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Coronavirus - Support available for self-employed workers

An update on the support available for self-employed workers

Coronavirus - Support available for self-employed workers

A second and final Self-Employment Income Support Scheme grant is now available in August 2020.

From 13 May 2020, self-employed individuals or members of partnerships whose businesses have been adversely affected by COVID-19 have been able to apply for a Self-Employment Income Support Scheme ("SEISS") grant, worth 80% of their average monthly trading profits (reducing to 70%, as detailed below). Further details of this, and other, support available to the self-employed are below. 

The first SEISS grant allowed self-employed workers to claim a taxable grant of 80% of their average monthly trading profits, and it was initially paid out in a single instalment covering three months, and capped at £7,500 altogether. Within two days of the scheme being open, there had been 1.1 million claims worth £3.1 billion; there have now been 2.3 million claims worth £6.7 billion. 

On 29 May, the government announced that those who are eligible for SEISS are able to apply for a second and final grant in August, capped at £6,570. The grant will be worth 70% of an individual's average monthly trading profits, paid out in a single instalment, covering three months' worth of profits (capped at £6,570 in total).

The government has provided guidance on how the scheme works:

Who can apply for the scheme?

By now, the government should have contacted everyone who is eligible for the scheme, either by letter, text, or e-mail, providing them with a date and time to make an application. The majority of applications were expected to be completed by Monday 18 May, with payments reaching accounts from Thursday 21 May. Individuals can continue to apply for the first SEISS grant until 13 July. 

The eligibility rules are detailed below (they are the same for borth the first and second SEISS grant). If you have not been contacted by HMRC, but think that you are eligible, you can use HMRC's online tool here to find out if that is the case. All you need is your unique taxpayer reference (UTR) code and your National Insurance number. 

  • You must have filed a tax return for 2018/19, i.e. you must have been self-employed prior to 6 April 2019. The last possible moment to file your 2018/19 tax return was 23 April 2020 (the deadline was extended from 31 January). Note that, even if you only had a few months' self-employment income on your 2018/19 tax return, this will count as your total profit for the year, and the government will not pro-rate it for a full year. 
  • You must earn more than 50% of your total income from self-employment.This must have been the case for either your 2018/19 tax return or the average of your 2016/17, 2017/18 and 2018/19 tax returns.
  • Your average taxable profits in the 2016/17, 2017/18 and 2018/19 tax years must be less than £50,000.
  • Note that you can keep on working if you receive the grant (unlike the employee "furlough" scheme).

Other help available for self-employed workers

Not all self-employed workers will be eligible for the grant. For example, if you earn more than £50,000 per year or less than half of your income is from self-employment, you will not be eligible. If you don't meet the eligibility requirements you won't be able to claim the SEISS, but other support is available.

Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme is open to self-employed people and offers access to loans, overdrafts, invoice finance and asset finance of up to £5 million.

The scheme is offered by all major banks. Please read our article on the CBILS for more detail.

Bounce Bank Loan Scheme

The Bounce Back Loan Scheme is a 100% government-backed loan available through all major lenders, offering up to £50k to businesses, with no repayments due in the first 12 months. 

Please read our recent article on the BBLS for more detail.

Deferral of payments on account

Income tax payment on account would ordinarily be due on 31 July 2020 under the self-assessment system, but HMRC is giving individuals the option to defer this until 31 January 2021.

This is an automatic deferral with no applications required. No penalties or interest for late payment will be charged if you defer payment.

VAT registered businesses

If you are a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020 you have the option to defer the payment until a later date, on or before 31 March 2021. You will still need to submit your VAT returns on time. If you normally pay by Direct Debit, you should contact your bank to cancel this as soon as possible. 

Universal Credit

The government has removed the minimum income floor to Universal Credit and boosted the standard allowance from 6 April – meaning a single person aged over 25 could get a standard monthly allowance of £409.89. Further information is available on HMRC's page here

Please get in touch with your usual contact if you'd like any assistance with the support available. You can call us on 01892 546546, or use any of our usual channels to communicate with our team. If the main line is busy, please do leave a message and we will get back to you.

Please note: The information above is based on our understanding and interpretation of the government's guidance as of Friday 29 May 2020. Changes to government guidance on a daily basis may mean that this information is not accurate or complete beyond this time.