James Trowell
Accounting Lead
Posted 2 weeks ago

LIVE COVID-19 UPDATE: What support is available for you and your business?

With the landscape of the COVID-19 pandemic changing daily, updates on government support are evolving frequently. 

Below we dig into the detail around the financial support that is currently available to self-employed people, including how to take action on each measure, and we’ll update this blog each time new information is released.

Last updated – 27th March 2020

Self-Employed Income Support Announced

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, worth 80% of their profits up to a cap of £2,500 per month.

How does it work?

  • HMRC will use the average profits from tax returns in 2016/17, 2017/18 and 2018/19 to calculate the size of the grant.
  • In addition to the taxable grant, if you are able to trade you can continue to do so.
  • Payments will be paid by June (backdated to the 1st of March).
  • For those struggling with cash flow in the meantime, the Chancellor recapped some of the other support measures available; business interruption loans, deferred payments on account until January 2021 and Universal Credit (see more below).

Who can get it?

  • Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018/19
    • Your average trading profits and total income across up to the three years between 2016/17, 2017/18, and 2018/19.
  • If you have trading profits of over £50,000, you will not be eligible for support (the chancellor suggested this would affect ~5% of the self-employed workforce).
  • You need to have completed your 2018/19 tax return. If you haven’t yet, you get an additional four weeks from today to complete it.
  • To be eligible you need to 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 2020/21.

What happens next?

  • HMRC are working on it urgently, and it’s expected no later than the beginning of June.
  • If you’re eligible, HMRC will contact you directly, ask you to fill out an online form, then pay the grant straight into your bank account.

We’ll be sharing more information on our COVID-19 support page as more information on the detail is released.

We believe the government can do more

It certainly feels like a generous package for some and we’re grateful to the Chancellor for a fast response. However, there are some big holes in the plan.

  • There are millions who cannot wait until June to receive support. We will be writing another letter to the Treasury committee to push for this to be changed.
  • By only relying on 3 years of Self-Assessments up to 5th April 2019, those who became self-employed more recently may only have partial earnings to go on or could be missed entirely.

We will also lobby the government to encourage them to allow self-employed people to submit their 2019/20 Self-Assessment when the window opens on the 6th April and use this up-to-date data for consideration in their application for support, increasing the number of self-employed people that are eligible.

We have the technology to support the fast creation of Self-Assessments, and we’re working to make it more widely available now.

Sign up here to follow our progress on this.

3-month extension period to file annual accounts

If you are a Limited company, you will now be able to apply for a three month extension on your deadline to submit annual accounts to Companies House.

While companies will still have to apply for the extension to be granted, those citing issues around COVID-19 will be automatically and immediately approved. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete. Please note if you have extended or shortened your Company year end, you may be ineligible.

Key ActionFollow the link here to apply for an extension to file your accounts to Companies House.

HMRC’s Time to Pay-Helpline

All businesses and self-employed people in financial distress, with outstanding tax liabilities, may be eligible to receive support with their tax affairs (PAYE, Corporation Tax, Self Assessment tax, VAT) through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you are worried you might miss your next payment (whatever type of tax it may be) due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

If you’re worried about a future payment, it’s best to call them nearer the time so they can deal with the most urgent enquiries first.

Key Action – Call HMRC’s dedicated line if you are concerned about meeting your next tax payment.

Self Assessment Payment Deferral

If you completed a self assessment tax return for the 18/19 tax year (the tax return you will have completed by 31st January this year), it’s possible that you would have to make payments on accounts (in January 2020 and this coming July) towards your 19/20 tax liability. 

This second payment on account, usually required in July, has now been deferred until January 2021 and no interest or penalties will be applied. 

Key Action – Automatically applied, make your second payment on account January 2021 when you settle your full tax bill for the 19/20 tax year.

VAT Payment Deferral 

VAT payments due between now and the 30th June 2020 have been deferred until April 2021. 

There is no need to apply for this, you just simply do not need to pay your VAT until April 2021. Bear in mind that you will need to set a reminder to ensure that this is paid by then! That said, if you are still able to make your VAT payments it is still advisable to do so. If you have a Direct debit with HMRC for VAT it is best to contact them directly or cancel the direct debit. 

It’s also worth noting that your VAT filing obligations remain the same, so you will still need to file the returns for each quarter that passes.

Key Action – Automatically in place. Remember to submit your VAT returns. If on Direct debit you may need to cancel this or contact the VAT office.

Mortgage and rent holiday

Mortgage borrowers can apply for a three month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible. But interest will still be charged. 

Tenants can apply for a three month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.

Key Action – Call your mortgage provider or landlord to request a three month payment holiday

Statutory Sick Pay

Legislation changes will allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) if they fall ill as a result of COVID-19 and are unable to work. This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers with less than 250 employees will be eligible. The government will effectively refund £94 per week, maximum of £188 to your company. 

Key Action – HMRC are creating a rebate scheme. Further details will be provided in due course once the legalisation has passed.

Coronavirus Job Retention Scheme

The Job Retention Scheme is a grant from the government to pay employees’ wages, who would have otherwise been made redundant during these unprecedented times. 

In order to claim this, companies would need to have employees that you designate as ‘furloughed workers.’ Once furloughed, they will be unable to work for you at all during this time. HMRC will be setting up a new online portal in which employers will be able to submit a claim. No news on when this will be ready currently. We’ll update this as soon as we have more information.

Companies will then be reimbursed up to 80% of their wages (up to £2,500) per employee per month. This can be backdated to the 1st March 2020.

The landscape of this keeps changing, so we will update this as more information is announced.

Key Action – HMRC are creating a new online portal where you can submit claims. This is not available yet.

(We know this doesn’t cover self-employed people, more on that below).

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme offers loans of up to £5 million for SMEs through the British Business Bank for up to 6 years. The government has announced that these loans will be interest free for the first 12 months. 

The scheme is designed to support smaller businesses (SMEs) who don’t meet a lender’s normal lending requirements for a fully commercial loan or other facility, but who are considered viable in the longer-term. CBILS will initially run for six months, with the government confirming it will be demand led and funding will not run out. 

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.

The way in which this scheme will be delivered is via commercial lenders backed by the British Business Bank. 

You are eligible for the scheme if:

  • Your business meets the other British Business Bank eligibility criteria
  • Sole traders and freelancers are eligible, as long as the business activity is operated through a business account. 
  • The scheme is open to sole traders, freelancers, body corporates, limited partnerships, limited liability partnerships or other legal entities carrying out a business activity in the United Kingdom, with annual turnover of up to £45m, operating in all sectors.
  • The business must generate more than 50% of its turnover from trading activity (as opposed to investment activity for example)

See further information here.

Key Action – Get in touch with one of the approved lenders mentioned above and have a borrowing proposal ready which, were it not for the current pandemic, would be considered viable by the lender.

IR35 & off-payroll working

HM Treasury have said they intend to postpone the introduction of the Off-payroll working rules to the private sector.

The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date is now deferred to 6 April 2021. You can read more about IR35 and who it affects here.

Key Action – If you are a PSC Ltd company working on a contract, check in with your hirer on the latest status of any contracts from 6th April 2020.

Further support for the Self-Employed

Universal Credit

Universal Credit is the welfare system, which replaces six benefits – including working tax credit and housing benefit – with one monthly payment.

You may be able to claim Universal Credit if:

  • you’re on a low income or out of work
  • you’re 18 or over (there are some exceptions if you’re 16 to 17)
  • you’re under state pension age (or your partner is)
  • you and your partner have £16,000 or less in savings between you
  • you live in the UK

The Universal Credit standard allowance – the amount you’re paid each month – currently ranges between £251.77 and £498.89 depending on your age and if you are a couple.

The requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have been affected by COVID-19. This is to ensure self-employed claimants will receive support.

People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.

Key Action- Review your circumstances and follow the link here to apply.

Employment and Support Allowance 

In addition to this you may be able to apply for Employment Support allowance in which you can apply for Employment and Support Allowance (ESA) if you have a disability or health condition that affects how much you can work.

A contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25. This may be claimed by eligible people affected by COVID-19 or self-isolating in line with advice from Day one of sickness, rather than Day eight.

Key Action- Review your circumstances, you can apply through your universal credit account with HMRC( you’ll set this up once you apply). 

Other Support

Other support that has been announced is as follows:

In Summary

As you can see currently the business support for the Self employed is extremely limited at the moment. We have caught wind of a bill to further aid Self-employment but this has not been passed as yet. We are hoping to hear more on this either some point this week or early next week.

Join us on our community forum Coconut Bite to keep updated and informed with the latest from the Self employment industry. We’ll also answer any questions or queries you have around the support available.

Stay home, save lives.

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