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 - 22nd October 2020
SEISS - extended until April 2021
The SEISS grant is being extended once more. In terms of who can make a claim, you must:
- Currently, be eligible for the SEISS (although you don’t need to have claimed any of the previous grants)
- Declare that you are currently actively trading and plan to continue to keep your business going
- Declare that you’ve been negatively impacted by a slow in demand as a result of Covid-19 during the grant periods
The scheme will last for an additional six months, from November 2020 to April 2021.
As before, the grants will come in the form of two separate taxable grants, each covering a three-month period. The big change is the % of average trading profits it covers.
The third grant, covering the three month period from November until the end of January, will be worth 40% of average monthly profits, capped at £3,750 in total (this was increased from 20% on 22 October). As before, this will be paid out in a single instalment.
Details haven’t been released yet for the fourth grant, covering February to April 2021. So, we’ll keep an eye out for further guidance and share any information we have.
SEISS Part 2
Today, Part 2 of the Self Employed Income Support Scheme is live. Claims for the first part of the grant are now closed.
If your business has been affected by COVID-19 on or after the 14th July 2020, you must make your claim on or by the 19th October 2020. This is on the basis that you meet the eligibility criteria (it is the same as before).
You will be able to make a claim online. HMRC are aiming to make payment into your bank account in 6 working days and will send an email when its on its way.
What information will you need to make your claim:
- Self Assessment Unique Taxpayer Reference (UTR)
- National Insurance Number
- Government Gateway user ID and password – if you do not have a user ID, you can create one when you make your claim
- UK bank details
To get started follow here to make your claim.
Reduced rate of VAT for hospitality, holiday accommodation and attractions
The chancellor has announced that it will introduce a temporary 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions.
This cut in the VAT rate from the standard rate of 20% will have effect from 15th July 2020 to 12 January 2021.
For more information on the affected supplies and services that will benefit from this change see further information here.
SEISS Extended to August
The Self Employment Income Support Scheme has been extended until the end of August, covering a further 3 months.
If you are eligible for the grant, the second and final grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.
Here are the key facts from the latest announcement:
- If you’re eligible and want to claim the first grant (covering March, April and May) you must make your claim on or before 13 July 2020 or you will miss this first payment of the grant.
- You will be able to make a second claim using the HMRC online portal following the same process.
- Currently there is no access to make the second claim as yet, this will be made available on the 17th August.
- A reminder you will need to make this claim yourself. Your accountant or tax adviser will be unable complete this on your behalf.
- This will be the final SEISS claim available from the Government.
- HMRC will again contact you if you are eligible for the second grant.
Job Retention Scheme Extension Details
The Chancellor has now set out further details on how the government will continue to support jobs and business as people return to work. This detail relates to the Job Retention scheme and those who have been 'furloughed'.
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time.
From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries capped at £2,500.
The scheme updates mean that the following will apply for the period people are furloughed:
- June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Job Retention Scheme Extended
Rishi Sunak has extended the government’s coronavirus job retention scheme until October.
Announced yesterday, the scheme will remain the same until the end of July. This meaning that the Government will continue to pay 'furloughed' workers 80% of their salaries.
However, from August to October there will be “greater flexibility”, including allowing part-time workers on the scheme and making employers contribute towards some of it. So we would expect to see some revision in the percentage of Government support from August. We await to see further details post July.
You can now use an online tool from HMRC to check if you are eligible to make a claim through SEISS.
HMRC has released an online tool so you can check eligibility and let you know WHEN you'll be able to make a claim.
You’ll need your:
- Self Assessment Unique Taxpayer Reference (UTR) number (there is some guidance here if you can't get your hands on this: https://www.gov.uk/find-lost-utr-number)
- National Insurance number (again, some guidance here if you don't know what yours is: https://www.gov.uk/lost-national-insurance-number)
The latest on the government support available
Recording of a live webinar which took place on Wednesday 29th April
Government announces launch of Bounce Back Loans
In response to small businesses struggling to access finance, the government has announced the launch of Bounce Bank Loans. The chancellor promises it will be a simple application process for the smallest businesses with no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in.
The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000.
The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders, available from Monday 4th May. Accredited lenders are being updated here.
If you already have a Coronavirus Business Interruption Loan (CBILS) for £50,000 or less, you can convert it to a Bounce Back Loan by contacting your lender. The deadline for this is 4th November 2020.
Furlough scheme cut-off date extended to 19 March
The Government have made changes today to the Job Retention Scheme previously, you had to be employed as of the 28th February 2020. However this was missing many individuals.
But following a review of the delivery system and to ensure the scheme helps as many people as possible, it has been confirmed the eligibility date has been extended to March 19 2020– the day before the scheme was announced.
Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means that the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020.
Sole Directors- Job Retention Scheme
With new guidance released around the job retention scheme the Government have confirmed that sole directors will be able to furlough themselves from their limited company. This is provided that they do not do any work through their Limited Company whilst on furlough.
Updated guidance from HMRC can be seen here.
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 and these profits constitute more than half of your total taxable income
- Your average trading profits and total income across up to the three years between 2016/17, 2017/18, and 2018/19 and these profits constitute more than half of your average taxable income in the same period
- 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.
- If you have not submitted your 18/19 tax return as yet, you have until the 23rd April to get this completed.
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.
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 Action - Follow 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 024 1222.
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 31st March 2021.
There is no need to apply for this, you just simply do not need to pay your VAT until 31st March 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, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. This can be backdated to the 1st March 2020.
You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020.
Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation.
If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.
You should make your claim using the amounts in your payroll - either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.
If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.
Key Action - Read up on the latest guidance found here for eligibility.
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. Their will be no personal guarantees for facilities under £250,000.
The way in which this scheme will be delivered is via commercial lenders backed by the British Business Bank.
A lender can provide up to £5 million in the form of:
- term loans
- invoice finance
- asset finance
CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending.
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)
Details you may need if you approach a lender:
- The amount you would like to borrow
- What the money is for — the lender will check that it’s a suitable business purpose and the right type of finance for your needs
- The period over which you will make the repayments — the lender will assess whether the loan is affordable for you
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 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).
A summary of other support that has been announced can be found at this link.