Covid 19: Financial Support for the Self-Employed
In the times we find ourselves in, many people are anxious about their financial situation and what will happen if they lose their job or can’t continue in business due to Covid 19.
In a previous post, we talked about the Coronavirus Job Retention Scheme for salaried employees, but the self-employed are equally as impacted by current events.
There is a lot of confusing and conflicting guidance about what financial help is available to the self-employed, including CIS workers, so we have pulled together the following information to hopefully make things clearer:
Self-employed Income Support Scheme (SEISS)
The government announced they will be bringing in a Self-employed Income Support Scheme (SEISS).
This is expected to be launched in early June and will involve an application process to HMRC.
If you included self-employment on your 2018-19 tax return, HMRC will contact you directly and invite you to apply online.
This scheme applies to those with profits of less than £50,000 (and this is more than half of your total income if you have income other than self-employed income).
Who is eligible?
You can apply for the SEISS if you have:
- Submitted your 2018-19 tax return
- Traded in 2019-20
- Are trading, or would be except for COVID-19
- Intend to trade in the 2020-21 tax year
- Lost profits due to COVID-19
How much will I receive?
SEISS will allow you to apply for a government grant of 80% of your average monthly profit (up to £2,500), for an initial 3 months, which will be extended if needed.
The amount will be determined by an average of the 2017, 2018 and 2019 tax years. If you started trading between 2016 and 2019, HMRC will only use the traded years to average.
Are there any exclusions?
SEISS has been designed with most self-employed taxpayers in mind. This will not therefore apply to higher earners, as defined by those exceeding £50,000 average annual profit.
I am employed / receive other income and self-employed, what does this mean for me?
The £50,000 threshold must also make up more than half of your total income. If therefore you earned over £50,000 in an employment or any combination of other taxable income (e.g. property or investments), this would not apply to you.
What if I haven’t completed my 2018-19 tax return?
Part of the initiative and delay until June is to allow those who have not done so already, to bring their tax affairs up to date.
You therefore have 4 weeks to submit the 2018-19 tax return (by 23rd April 2020), in order to remain eligible for SEISS.
HMRC self-assessment penalties also increase on 1st May 2020 and it is therefore advisable to ensure your tax return is filed by this time, even if you are not eligible for SEISS.
What if I am not eligible?
Many are asking what happens if you are not eligible for SEISS, and even if you are, what other financial help is available between now and June.
Various measures have already been introduced, which extend to the self-employed, these include:
- Deferral of self-assessment income tax payments on account and VAT payments
- Grants for small business, who occupy property
- Business Interruption Loan Scheme
- Increased universal credit
Keeping you informed
We hope this has been useful. We'll continue to share information and updates as we get them.
The Liquid Team are working hard (from our respective homes!) to support all of our agencies and contractors, so please don't hesitate to get in touch by phone, email, webchat or on our social media pages. Stay safe everyone.