Advice for the Self-Employed

Amid mounting pressure to provide some relief to the self-employed, the government has announced an assistance package for those individuals.

This scheme, which is open for a minimum of 3 months, will pay the self-employed a taxable grant worth 80% of average monthly profits of up to £2,500 per month. A key difference between this scheme and the Furlough Leave scheme (which applies to employees) is that the self-employed can claim these grants and continue to do business at the same time. However, there is a sting in the tail – there is a delay as it is not expected to be in place until June 2020.

To be eligible, you must have had either:

• a trading profit of up to £50,000 in 2018/19, or
• average annual trading profit for the last 3 years ending 2018/19 of no more than £50,000

Those earning more will not qualify. Nor will those who do self-employed work alongside paid employment. The HMRC will use the filed tax returns to identify those eligible under this scheme and will contact them directly.

Today the following emergency measures were announced – more details will follow:

• Self Employed Income Support Scheme – (taxable) grant worth 80% of average monthly profits over last 3 years, up to £2500 a month.
• Initially 3 months – scheme anticipated to be running by June, and should cover 95% of self-employed
• Scheme open for those with trading profits up to £50000
• Must make majority of income from self employment
• Must have tax return for 2019
• HMRC to contact those eligible
• Anyone who missed January self assessment filing deadline given 4 weeks from today
• Deferred tax payments until Jan 2021 next year
• Ability to access Universal Credit
• Self employed with non-working partner and 2 children; renting in social sector can receive up to £1800 a month in welfare support
• Access to Business Interruption loans

One question asked was:

What about those without 3 years accounts or even 1 years accounts, ie recently self-employed?

The response was: if you don’t have 3 years they will look at 3, 2 or even 1 years accounts, for those with less there is (to paraphrase) “really nothing we can do and can only use the database we have now about those who have filed tax returns.”

For the more recently self-employed it is  complex, and people should look at other welfare announcements made.

Tax and NI to be potentially equalised in the future.

Some good news for self-employed and SMEs owning/running cars vans, or motorcycles,

From 30 March 2020, MOT due dates for cars, motorcycles and light vans will be extended by 6 months. This is being done to help prevent the spread of coronavirus.

Also on the link are instructions regarding what to do if your vehicle is due before that date.

More here

Update as at 24th March – The Government has now released guidance (England only) on how to apply for the Small Business Grant Fund and the Retail Hospitality & Leisure Grant scheme which you can access here

There has been much criticism that the government has put in place financial assistance for the employed but has “forgotten” about the self-employed and those in the gig economy. In response to this, the House of Commons Public Bill Committee has proposed the Statutory Self-Employment Pay amendment to the Coronavirus Bill.

This amendment, if passed in its current form, will mean the introduction of Regulations whereby “freelancers” and “self-employed people” will receive guaranteed earnings of:

(a)  80% of their monthly net earnings, averaged over the last three years; or,

(b)  £2,917 per month

whichever is the lower.

Although the term “Freelancers” is yet to be defined, the proposed amendment offers some hope to many who had fallen between the gaps of the financial assistance schemes currently in place.

We will report more on this as and when the provisions become clearer.

Benefits

• Universal Credit – is replacing
  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • income-based Jobseeker’s Allowance (JSA)
  • income-related Employment and Support Allowance (ESA)
  • Working Tax Credit
  • If you currently get any of these benefits, you do not need to do anything unless your circumstances have changed.
• Aimed at helping those on a low income the Government has suspended the ‘minimum income floor’ for the self-employed. There is now no assumption that you earn the equivalent of the living wage (£8.72 an hour from April). On the 20^th March 2020 the Government announced that this suspension would continue so that the Universal Credit, for the self-employed, equalled the same amount in real terms as SSP for an employed person.
• You can qualify for this if your income has dropped below the threshold for Universal Credit because of the economic impact of Coronavirus, even if your earnings before were too high.
• On 20^th March 2020 the Government announced that:
  • Universal Credit will increase by £1,000.00 for 12 months
  • Working Tax Credit will also increase by the same amount
• Employment Support Allowance (ESA) https://www.gov.uk/employment-support-allowance You can apply for Employment and Support Allowance (ESA) if you have a disability or health condition that affects how much you can work. Eligibility is here https://www.gov.uk/employment-support-allowance/eligibility and you can claim for this as well as Universal Credit. If you test positive for coronavirus or are in self-isolation, you will be able to claim from day one. You can apply for ESA if you have a disability or health condition that affects how much you can work.

HMRC, Tax, Employment Allowance (NI) and SSP

• Remember that the first 14 days of Statutory Sick Pay (SSP) per employee, from day one, can be reclaimed as SSP in the usual way for those off work due to coronavirus. You will need to keep a record but employees are not expected to provide a GP ‘Fit note’ – you have to take their word for it.
• Talk to HMRC about more time to pay your tax. They have previously set up a dedicated helpline to deal with income tax, PAYE, Corporation Tax and VAT called ‘Time to Pay’ and can talk to you about delaying payment, or instalment plans. Call 0800 015 9559 Monday to Friday, 8am to 8pm and on Saturday, 8am to 4pm. They should waive late payment penalties and interest, but you need to contact them as soon as you have concerns.
• Employment Allowance – remember that small employers who have a National Insurance bill of £100,000 or less will continue to qualify and can get £4,000 off their NI bill. Details here https://www.gov.uk/claim-employment-allowance
• It was announced on the 20^th March 2020 that the payments due for Self Assessment (next instalment due July 2020) are deferred to January 2021
• Payment of VAT is deferred for the next quarter, so that the next due date is at the end of the year (so the regular December or January quarter due date, depending on how your VAT quarter falls) 

Banks & Lending – available from Monday 23^rd March 2020

• To encourage banks to agree to lend, the British Business Bank is setting up a Coronavirus Business Interruption Lending Scheme to give a government backed guarantee to 80% of the loan or overdraft facility. Talk to your bank for more details.
• Banks can now issue loans of up to £5m (up from £1.2m); that the Government will underwrite and the first 12 months are interest free. Talk to your bank.
• Lenders will, apparently, provide mortgage payment holidays of at least 3 months for those facing finance difficulties as a result of the outbreak. Similar details for those that rent are waited. Talk to your bank as soon as possible if you have any concerns.

The first thing you should do is to check any and all insurance policies that you have.

Even though you may think that it is unlikely that your business interruption policy (if you had one) is wide enough in scope to help you must check!

Look to see if you are covered for any losses due to business interruption or any other applicable category in your policy. Talk to your broker…and if you do not have cover…read on. (Remember that if you do have some cover and try some of the routes below that you cannot get paid twice…)

Cashflow

• Now more than ever be sure to issue your invoices as soon as possible. Remember your rights to compensation and interest on late payments – see here
• Ask governmental bodies for time to pay things like VAT or other taxes. It is much better for the economy to reach an agreement with a large creditor like HMRC than to not pay another business. See our separate advice section on HMRC.
• If you have instalments or drawdowns due in the coming weeks ask your customer or client if you can draw that early. They do not have to agree, but if you do not ask you will not have the opportunity. Some supermarkets, for example, are paying immediately rather than the previous 30 day, or other, terms to ensure continuity in the supply chain.
• New accounts – be robust and review your payment terms, if you can get money upfront, or deposits, consider doing so.

Cash Grants

• Businesses in retail, hospitality and leisure that have premises with a Rateable Value below £51,000 are to be given a £25,000 cash grant.
• Those businesses that were eligible for Small Business Rates Relief or Rural Rate Relief that had been going to receive a £3,000 cash grant will now receive £10,000. Details here
• Government is working with local authorities to outline the scheme and help them to prepare. We understand that once set up your local authority will contact those that qualify rather than having to apply. Get this in your diary to check with your local authority at the start of April as some may be different.

HMRC, Tax, Employment Allowance (NI) and SSP

• Remember that the first 14 days of Statutory Sick Pay (SSP) per employee, from day one, can be reclaimed as SSP in the usual way for those off work due to coronavirus. You will need to keep a record but employees are not expected to provide a GP ‘Fit note’ – you have to take their word for it.
• Talk to HMRC about more time to pay your tax. They have previously set up a dedicated helpline to deal with income tax, PAYE, Corporation Tax and VAT called ‘Time to Pay’ and can talk to you about delaying payment, or instalment plans. Call 0800 015 9559 Monday to Friday, 8am to 8pm and on Saturday, 8am to 4pm. They should waive late payment penalties and interest, but you need to contact them as soon as you have concerns.
• Employment Allowance – remember that small employers who have a National Insurance bill of £100,000 or less will continue to qualify and can get £4,000 off their NI bill. Details here.

Business Rates

• Don’t forget the budget provision to abolish rates for all businesses with up to £51,000 Rateable Value
• All retail, hospitality and leisure businesses in England receive a 100% business rates holiday for the next 12 months

Banks & Lending – apparently available from Monday 23rd March 2020

• To encourage banks to agree to lend, the British Business Bank is setting up a Coronavirus Business Interruption Lending Scheme to give a government-backed guarantee to 80% of the loan or overdraft facility. Talk to your bank for more details.
• Banks can now issue loans of up to £5m (up from £1.2m); that the Government will underwrite and the first 6 months are interest free. Talk to your bank.
• Lenders will, apparently, provide mortgage payment holidays of at least 3 months for those facing finance difficulties as a result of the outbreak. Similar details for those that rent are awaited. Talk to your bank as soon as possible if you have any concerns.

Benefits

• Universal Credit – is replacing:
  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • income-based Jobseeker’s Allowance (JSA)
  • income-related Employment and Support Allowance (ESA)
  • Working Tax Credit

If you currently get any of these benefits, you do not need to do anything unless your circumstances have changed.

• Aimed at helping those on a low income the Government has suspended the ‘minimum income floor’ for the self-employed. There is now no assumption that you earn the equivalent of the living wage (£8.72 an hour from April).
• You can qualify for this if your income has dropped below the threshold for Universal Credit because of the economic impact of Corona Virus, even if your earnings before were too high.
• Employment Support Allowance (ESA)  You can apply for Employment and Support Allowance (ESA) if you have a disability or health condition that affects how much you can work.
• Eligibility is here and you can claim for this as well as Universal Credit. If you test positive for coronavirus or are in self-isolation, you will be able to claim from day one. You can apply for ESA if you have a disability or health condition that affects how much you can work.

Other help

• Business Support Helpline 0300 4546 3565 – the UK Government’s Department for Business, Energy and Industrial Strategy’s dedicated business support helpline for England. In Wales, ring the Business Wales Helpline on 0300 060 3000.
• The British Chambers of Commerce has produced detail guidance which you can access here.