Help for the Self-Employed07 May 2020
Let's start from the beginning, which is usually a good place to start.
Initially, the Government launched its furlough scheme to allow employers to give some employees a leave of absence during the Covid-19 crisis and to receive support for a proportion of their salary.
This opportunity obviously excluded the self-employed, who form a large part of the UK workforce. As an example, the number of self-employed increased from 3.3 million people (12.0% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017, according to the Office for National Statistics (ONS).
I was able to chat through the financial support options available to the self-employed during these very challenging times on BBC Surrey & Sussex on the morning of 04 May 2020.
So, how can they be helped, and when?
The Self-Employed Income Support Scheme (SEISS) was launched by the Chancellor on 09 April 2020.
The scheme will allow self-employed individuals to claim a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering three months, and capped at £7,500 altogether. This is a temporary scheme (but it may be extended) and is designed to support the self-employed and those in a business partnership.
The scheme is for those individuals with profits up to a maximum of £50,000 gross in a year. There are some helpful worked examples on the Gov.uk website.
If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
The grant will be subject to Income Tax and self-employed National Insurance contributions.
There is other support available if you're not eligible for the grant – again, have a look on the GOV.UK website.
When will support be available?
The online service to claim this support is not available yet. HMRC will aim to contact eligible individuals by mid-May 2020 with an invitation to claim using the GOV.UK online service. Payment will be made by early June 2020 (they hope) for approved claims.
What you'll need if you are eligible
To claim, you will need your:
- Self Assessment Unique Taxpayer Reference (UTR) number. If you do not have this find out how to get your lost UTR number
- National Insurance number. If you do not have this find out how to get your lost National Insurance number
- Government Gateway user ID and password
- Bank account number and sort code you want the grant paid into (only provide bank account details where a Bacs payment can be accepted)
You will also have to confirm to HMRC that your business has been adversely affected by coronavirus.
Once you've submitted your claim, you will be told straight away if your grant is approved. If so, the Government will pay the grant into your bank account within 6 working days.
Other help you can get
You can make a claim for Universal Credit while you wait for the grant. Do this sooner rather than later, although Universal Credit offers claimants £94.59 per week (varies on circumstances) and an extra 1M people have aimed to claim in the last few weeks. The GOV.UK website's 'Understanding Universal Credit' guidance explains what a person should do when it comes to coronavirus, also suggesting that those making a new claim should not delay because the application can take some time, as we note below.
The payment is made monthly, and it can take up to five weeks for the first payment to be made. This may cause problems, and a person may be able to apply for an advance, however this must be paid back - beginning from the first payment.
More details here: https://www.gov.uk/universal-credit/how-to-claim
The SEISS grant may affect the amount of Universal Credit you get but will not affect claims for earlier periods.
There might be other options and the government is also providing the following help for the self-employed:
- deferral of Self Assessment Income Tax and VAT payments
- grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
- Bounce Back Loan
Owner / Director of your own company?
If you have other employment as a director or an employee paid through PAYE, your employer may be able to get support using the Coronavirus Job Retention Scheme.
Many individuals work via small limited companies and that makes them a director, which is an officer of a company, and therefore an employee. They may have limited state support available. If you have an accountant, you might want to check your position and what's available if you are struggling.
Finally (and importantly): Government backed 'Bounce-Back' loans
The Government today has launched the 'Bounce-Back' loan scheme on 04 May 2020, and it appears that applications are coming in thick and fast. This new option is very much aimed at small businesses with lower levels of employees.
Available to UK businesses, the Government will guarantee loans from £2,000-£50,000 (up to 25% of turnover), with no fees or interest payable in the first 12 months, available through banks and lenders, with an interest rate of 2.5% pa.
These are not grants, but loans, and can have a term up to 6 years if required. As with all these things, read the small print before agreeing a loan.
Chapters Financial is not responsible for the content of external websites. Please also note that many terms and conditions are being updated regularly and you may want to re-check a position you have looked at before.
No individual advice is provided during the course of this blog.
Keith Churchouse FPFS
Chartered Financial Planner
Chapters Financial Limited