Coronavirus – what help is there for self-employed people?

A reported 9 million people are potentially being ‘furloughed’. But what help is there for self-employed people?

A few weeks ago, the Government announced the Self-employment Income Support Scheme (SEISS). This is a new scheme that gives grants (you have to apply) for self-employed people to help you if you’ve lost income due to the pandemic.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended like the furlough scheme.

• Here’s the Government website for the Self-employment Income Support Scheme (SEISS).

• Our mates at MoneySavingExpert have a great guide here.

Here’s who can apply

You can apply if you’re a self-employed individual or a member of a partnership. To establish you’re, well, established, you must:

• Have submitted an Income Tax Self-Assessment tax return for 2018-19
• Traded in the tax year 2019-20
• You would have still been trading were in not for the pandemic
• You intend to continue to trade in the tax year 2020-21
• You have lost trading/partnership trading profits due to coronavirus

And when it comes to cash:

• Your trading profits must be less than £50,000 and more than half of your income come has to come from self-employment.

This is worked out by either:

• Average profits from the last three trading years – or –
• Profits in the last trading year (20/18/19)

Here’s how it works

• You get a grant (paid from the Government) that’s a bit like the furlough payments.
• You claim up to 80% of your profit from the Government.
• This is capped at £2,500 a month before tax.
• The money is paid in to your account in one chunk.
• And yes, you can keep working.

When can I claim?

This is the tricky bit. We’re expecting the application scheme to be out at the end of April. There’s nothing in place until then.  

The Government has said you will be contacted directly if eligible.

How can I claim?

You can only access the scheme through the Gov.uk website and it will be run by HMRC. The links will appear closer to that time along with the conditions for applying.

When do I see the money?

The cash will be paid in June in one chunk.

I’m struggling financially, what can I do?

Lots, but it’s important to face down your finances in the first instance.

The Government has announced a new mortgage holiday scheme. Details here from the British Business Bank:

Here’s the FCA’s guidance on how the banks should be running the scheme: https://www.fca.org.uk/consumers/mortgages-coronavirus-consumers

The regulator has also made it clear that:

• Business should not repossess you for the next three months at least
• Payment holidays and other means of support should be offered for loans and credit
• Lenders should not use this situation to make money or charge excessive interest and charges.

Resolver has a detailed guide to financial difficulties and the free services available to you, as well as your rights.

What businesses aren’t covered?

This is complicated. If in doubt, get in touch – but apply regardless.

• I you are in a family but you earned over £50,000 you will get nothing. However, if you are in a family with two earners on £49,000 each will get two lots of full support.
• If you pay yourself through a who pay themselves a dividend or a wage through a PSC will not be covered. As your accountant if you’re an LLP.
• Over 50% of your income must come from your self-employed wage.
• People with new businesses starting after 5 April 2019 will not qualify.

What about Limited Companies and their directors?

This one caught lots of self-employed people by surprise. No scheme was announced for people with LLP’s but we understand from the MSE team that limited company directors, even if they’re the only employee, can furlough themselves.

This is only the PAYE part of your income (your wages, not dividends). This matters because these payments will be much lower as the bulk of your cash will be in dividend payments. You also won’t be able to work for the company.

This is super complicated so check out the MSE guide here and speak to your accountant.

What about the business loans?

You may have heard a lot of news about the Government’s business loan scheme – the Coronavirus Business Interruption Loan Scheme (CBILS).

We’ll cover this in a more detailed guide, but in short:

• You shouldn’t have to give a personal guarantee (like your house) for loans under £250,000.
• Yes, you do have to pay it back.
• You can borrow up to £5 million.
• Bear in mind that different banks have wildly different approaches and interest rates available, so shop around.
• The Government is backing 80% of the loan which means they’re giving an assurance the loan will be paid, lessening the risk on the bank considerably.

What about my upcoming tax bills?

There’s a plan for that too.

You can defer your VAT that was due in March to June 2020. Here’s how it works ( you need to submit the returns on time though).

The same goes for your self-assessment payment due in July. The money must be paid before 31 March 2021 though.

There is also other guidance if you’re struggling with income/corporation tax here.