Financial help for self-employed people during the Coronavirus pandemic
The UK Government have announced a support package for people who are self-employed. On 03 March 2021, the Chancellor, Rishi Sunak, announced an extension to the scheme which not only means that it will last for longer, but will now also now include people who weren’t previously eligible for it.
Am I eligible for the Self-Employed Income Support Scheme?
- Because of the new changes to the scheme made by the Chancellor, you can now apply for the scheme if you have submitted an Income Tax Self-Assessment tax return for the tax year 2019-2020. The scheme was previously only open to people who’ve completed a tax return in the tax year 2018-2019. You must be trading when you apply (or would be if it weren’t for the effects of Covid-19), intend to continue trading and have lost trading/trading partnership profits due to Covid-19.
- A fourth SEISS grant will now be worth 80% of trading profits for three months up to £7,500, covering the months of February, March and April.
- Applications for the fourth grant will open in April.
- Your self-employed trading profits must be less than £50,000, and more than half of your income must come from self-employment.
- HMRC will use tax returns to calculate amounts to be paid under the scheme.
- You will get a taxable grant which will be based on 80% of the average profits from the tax years between 2016 and 2020. It will be up to a maximum of £2,500 per month for the 3 months of the scheme.
- HMRC will pay the grant directly into your bank account, in one instalment.
How do I apply for the grant?
- HMRC will contact you if you are eligible for the scheme and will invite you to apply online.
- If you claim tax credits, you’ll need to include the grant in your claim as income.
- The payment will be made in June but will be backdated to March.
Can I get any financial support whilst waiting for my payment?
- For urgent financial support in the meantime, you should look at benefit entitlement such as Universal Credit, Employment & Support Allowance and Job Seeker’s Allowance.
- The temporary Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses giving access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments. The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank. They may be eligible for the scheme if their business is UK based, with turnover of no more than £45 million per year.
- Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020-21 tax year.
- Nurseries in England may not have to pay business rates for the 2020-21 tax year (a decision on this hasn’t been formally announced).
- If your business is in the retail, hospitality or leisure sector, you could receive a cash grant of up to £25,000 per property. Your Local Authority will write to you if you are eligible for this grant.
- The Government is providing additional funding for Local Authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. Your Local Authority will write to you if you are eligible for this grant.
- All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s ‘Time To Pay’ service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances.
- The government will also support businesses by deferring VAT payments due between 20 March 2020 and 30 June 2020. Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
- The Self-Assessment payment on account, that is ordinarily due to be paid to HMRC by 31 July 2020 may now be deferred until January 2021. This is an automatic offer with no application required. No penalties or interest for late payment will be charged if the taxpayer defers payment of their July 2020 payment on account until January 2021.
- Further details can be found on https://www.businesssupport.gov.uk/coronavirus-business-support/
Can I apply for a Bounce Back Loan?
If you are self-employed with a small or medium-sized business affected by Coronavirus, this scheme will allow you to apply for a loan of up to £50,000.
- The scheme will launch on 4th May 2020 on the GOV.UK website
- The Government will guarantee 100% of a loan between £2,000 and £50,000
- The loan will be fee and interest free for the first 12 months
- Loans terms will be up to 6 years and the scheme will be delivered by accredited lenders
Am I eligible?
You are eligible for a Bounce Back loan if your business is based in the UK and has been negatively affected by the Coronavirus. Your business should not have been an ‘undertaking in difficulty’ on 31st December 2019.
You are not eligible if your business is:
- A bank, insurer or re-insurer (but not an insurance broker)
- A public sector body
- A state-funded primary or secondary school
- Already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS)
Businesses who have received a loan of up to £50,000 under the CBILS and would like to transfer it to the Bounce Back Loan scheme can arrange this with their lender up until 4th November 2020.
I’m self-employed and have debts – where can I get help?
Being in debt can be daunting, especially when you’re self-employed. However, there are plenty of options available to you, many of which will enable your business to keep trading through this difficult time. Find out about the additional help and support available to you on our dedicated Business debts hub.
Concerned about the effect of Coronavirus on your finances? Use our online debt tool to find out your options