In response to COVID-19, the Government has revealed a package of measures to support millions of self-employed workers whose income is impacted by the pandemic. While not available to everyone working for themselves in the UK, in this article we’ll outline the help sole traders, in particular, can receive from the Government as they look to manage the challenges presented by Coronavirus.
Self-employment Income Support Scheme (SEISS)
Sole traders and members of a partnership with average trading profits under £50,000 for each of the past three years may be able to claim a taxable grant worth 80% of these profits up to £2,500 monthly.
To be eligible, you must:
Have filed your Self-Assessment Tax Return for the 2018/19 tax year
Have traded in the 2019/20 tax year
Are trading when you apply for this grant or would be if it wasn’t for COVID-19
Expect to continue working self-employed in the 2020/21 tax year
Have lost income due to COVID-19
Receive more than half of your income from self-employment
While criticised for not including limited company contractors, who are exempt because they draw salary and dividends from their business, the SEISS has been welcomed by sole traders whose earnings have dramatically reduced in recent weeks.
HMRC has said it will invite those who qualify for the scheme to apply online when it launches, with individuals to be paid the grant directly into their bank account in one instalment in June.
It’s important to note that this financial support is taxable, meaning anyone who receives money from this scheme will need to declare it on their next self-assessment tax returns.
In contrast to the Government’s Coronavirus Job Retention Scheme for employees, who must stop working for their employer when reclassified as a ‘furloughed worker’, self-employed workers can continue to work in the meantime. HMRC has said it will “use existing information to check potential eligibility and invite applications once the scheme is operational.”
To find out more, visit the Government website.
Self-employed people out of work may be able to claim Universal Credit to help with living costs. The Government has temporarily increased this amount to £94.25 a week, although many have made the point that this isn’t nearly enough to see them through until June - when the SEISS is up and running.
Learn more and check your eligibility for Universal Credit by visiting the Government website.
Self-assessment and VAT payments deferred
In a move to ease the financial burden on all 5m of the UK’s self-employed workers, sole traders can defer their self-assessment payment on account (initially due on 31st July) to 31st January 2021.
Meanwhile, all VAT-registered businesses have the option to delay any VAT payments due between 20th March and 30th June 2020 by three months. Even if you decide not to settle your upcoming VAT bill, you will be expected to submit your returns to HMRC. Similar to the self-assessment returns deferral, this delay is optional and you don’t need to make HMRC aware.
Business Interruption Loan Scheme
This scheme is designed to help small and medium-sized businesses with loans of up to £5m, which can be repaid over 6 years. The Government, that will guarantee 80% of the loan with accredited lenders, has said the finance will be interest-free for the first twelve months.
For more information and to see a list of the lenders participating in this scheme, visit the British Bank’s website.
If, like many of our clients, you are a freelancer or contractor and work through your own limited company, we’ve outlined the specific support currently available to you in this article.
Ask away! One of our team will get back to you!