Coronavirus: Financial Help for the Self-Employed

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By Cai Bradley
Updated on Friday 17 April 2020

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While the government’s Coronavirus Job Retention Scheme for employees of companies has been well-documented, there has been notably less coverage on how self-employed people will be supported amid the Coronavirus fallout.

As a self-employed individual, you are unfortunately not eligible for statutory sick pay (SSP), so what help is available to help you get through this crisis?

Here’s a guide to your rights as a self-employed worker and how you can seek financial respite as the UK gets to grips with life in isolation.

In this guide:

Grants and financial support for the self-employed

Self-employed people don’t have the safety-net of statutory sick pay (SSP) to fall back on, but if you have to take time off work due to being unwell or self-isolation (or even if you’ve lost all your income due to Coronavirus), you might be able to claim certain benefits or grants.

The newest and most relevant type of help available in the UK is the Self-Employed Income Support Scheme (SEISS).

What is the Self-Employed Income Support Scheme (SEISS)?

The SEISS is designed to support self-employed workers whose income has been negatively impacted by Coronavirus.

The scheme is similar to the Coronavirus Job Retention Scheme for employees in that it provides a grant to self-employed workers worth 80% of their usual profits - up to £2,500 per month.

The scheme allows self-employed individuals to apply for taxable grants to combat any income loss that they might incur during the pandemic, potentially saving thousands of small businesses across the country.

How does the SEISS work?

As mentioned, the grants you can apply for through the SEISS are worth 80% of your profits, up to a maximum of £2,500 per month.

You must pay tax on them, but as they’re grants, you do not have to pay any of it back. How much you receive in grants is based on your profits over the last three years.

You will be contacted by HMRC if you’re eligible, so there’s no need to start trudging through your old finances to find out whether or not you qualify.

When will you receive your SEISS payments? The scheme itself is due to start paying out in June 2020, with payments likely to be backdated to cover March, April and May of this year as a lump-sum.

The scheme will be available to the self-employed across the whole of the UK and is expected to last a minimum of three months, but this could be extended nearer the time.

Unlike the government’s scheme for employees, you can keep working while receiving grants from the SEISS. 

It’s also worth noting that you don’t have to prove how much your business has been impacted by Coronavirus – everyone who meets the criteria will be eligible.

The main requirements include that you must:

  • Be self-employed or a member of a partnership
  • Have lost profits due to coronavirus
  • Have filed a tax return for the 2018-2019 tax year as a self-employed individual or member of a trading partnership*
  • Have actively traded in 2019-2020
  • Be trading when you apply (or would otherwise be if it wasn’t for COVID-19)
  • Intend to trade in 2020 to 2021
  • Have an average trading profit of less than £50,000
  • Show that more than 50% of your total income comes from self-employment

*This essentially means that you must have been self-employed prior to the 6th of April 2019 to qualify.

All the above requirements must be met, and if you are eligible, the scheme could help get you through a very tricky situation and could eventually save your business.

Find out how you could protect yourself further today with Income Protection Insurance.

How to apply for SEISS

If you’re eligible, you will be contacted by the HMRC directly, but they’re asking that you do not try to get in touch with them first.

The HMRC hasn’t said when exactly it will be in touch, but it is expected to be “once the scheme is operational”, according to a spokesperson.

Once they have been in touch with you and confirmed your eligibility, you will be required to complete an online application form. Following which, all being well, the grant will be paid directly into your bank account.

Try not to contact HMRC yet as there is nothing you can do to apply until the scheme is operational.

What help can I get if I'm self-employed?

It’s likely that some self-employed people in the UK will be eligible for the SEISS but will simply be unable to wait until June.

To help you get by before the SEISS is underway, there are some options available to you, including:

  • A business interruption loan
  • Universal credit

MoneySavingExpert’s Martin Lewis has also recommended that you use the cash that you have set aside for your July tax return bill to cover the immediate expenses you will face until you receive your grant.

As you can now defer the July self-assessment tax payment until January 2021, this advice is particularly useful.

You might like: Money Saving Tips for the Self-Employed

If you’re NOT eligible for the SEISS

Not everyone will be eligible for the SEISS, including those who:

  • Earn over £50k a year
  • Were not self-employed until AFTER April the 6th 2019
  • Earn less than 50% of their income through self-employment

You will not be able to claim the grants if you don’t meet the SEISS criteria, but there are some other options available.

Applying for a business interruption loan. There is a new temporary scheme available labelled the Coronavirus Interruption Loan Scheme, which is designed to offer self-employed people access to loans, overdrafts, invoice finance and asset finance worth up to £5million for up to six years. Applications are now open and the loan is provided by all major banks, but you can read more about it on the government’s business support website. 

Deferring your income tax payments. Income tax payments that are due to be made in July of 2020 under the self-assessment system can now be deferred until January 2021, so be sure to make full use of this if you are struggling to get by.

Self-assessment tax payments are being delayed to 2021

Those who pay most of their tax through the self-assessment system would usually make two payments every year to cover the previous year’s bill, with one being made before the end of January and the other before the end of July.

As a way of helping the self-employed during this difficult time, the government has announced that self-assessment tax payments are now being deferred until January 2021.

The relaxation of these laws means that there will be no payment due by July in 2020, providing self-employed people with some more time and extra cash to use towards immediate expenses.

Tip: Self-employed people that are struggling to pay tax amid the COVID-19 crisis can apply for a “Time to Pay” arrangement, which provides them with a pre-agreed period to pay what they owe in tax. Call the HMRC helpline on 0800 0159 559 for more information.

IR35 tax reforms are also delayed until 2021

Many self-employed workers will be glad to find out that the much-publicised and controversial reforms to the IR35 tax rules that the government had previously announced have now been postponed until April 2021.

This has been done as an attempt to support the self-employed who may be feeling under financial pressure amid the Coronavirus outbreak, but it is simply providing a relief – the changes will still go ahead as planned from April 2021.

Coronavirus updates for the self-employed at Compare UK Quotes

Here at Compare UK Quotes, we understand how distressing a time this is for all people – whether you’re employed by a business or self-employed and working for yourself  – which is why we are working to provide you with the specialist advice you need to stay as financially secure as possible amid the the pandemic.

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