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Advice for self-employed during the coronavirus outbreak

Self-employment Income Support Scheme  

The Government's Self-Employment Income Support Scheme (SEISS) gives self-employed individuals a taxable grant worth 80% of average monthly profits, up to £2,500 a month for the three months to 31st May 2020.

This scheme has also now been extended for another three months to 31st August 2020, however the amounts available to claim for this period have been reduced. The grant will be based on 70% of average month profits, capped at a maximum total claim of £6,570.

But what is available to who, what people need to claim and how, is covered in our dedicated guide to claiming your Self-Employment Income Support Scheme grant. We've added a series of frequently asked questions which should help address items we've seen our clients ask and help you navigate your way through the system.

What we know about the Self-employed Income Support Scheme

Detail and further information about the scheme was made available by HM Revenue and Customs (HMRC) on 4th May and has begun contacting those eligible for the scheme while also making available an online portal to check eligibility. Claims for the three months to May 2020 remain open, however claims for the next period will not open until August 2020.

Key details about the scheme are: 

  • For the claim period from March to May 2020, the scheme will provide a grant to self-employed individuals or partnerships, based on 80% of their profits up to a cap of £2,500 per month.
  • For the claim period from June to August 2020, the grant will be based on 70% of profits with an overall cap of £6,570.
  • You must have filed a tax return for 2018-19 as self-employed or a member of a trading partnership by 23rd April 2020. 
  • You must have lost trading/partnership trading profits due to COVID-19.
  • HMRC will use the average trading profits from tax returns in 2016/17, 2017/18 and 2018/19 to determine the size of the grant. Deducting any trading losses arising in those years from any profits.
  • In order to be eligible, you must have trading profits of no more than £50,000 and more than half of your total income come from self-employment for either the tax year 2018/19 or the average of the tax years 2016/17, 2017/18, and 2018/19.
  • Any amendments made after 26th March 2020 to tax returns already submitted will not be taken into account when working out eligibility for the grant.

On 14th April the Government released guidance to illustrate how HMRC will work out total income and trading profits for the scheme. The guidance can be found here.

The Government has said that before grant payments are made, the self-employed will still be able to access other available Government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account. Those not eligible for the scheme will also be able to access this support. 

Deferring tax payments 

Any payments on account towards Income Tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, have been deferred until the end of January 2021.  This is an automatic process and does not need to be applied for. 

In addition, the Government has enhanced the HMRC’s ‘Time to Pay’ arrangement scheme to help those with upcoming tax bills plan how they can pay with an individual plan. To support this, it has also launched a dedicated helpline –0800 024 1222  – with increased staff numbers, to help those who are concerned about being able to pay their tax due to coronavirus. 

Deferral of VAT payments 

If your business is VAT registered, the VAT becoming due between 20th March 2020 and 30th June 2020 will be automatically deferred so that the payment won’t be due until 31st March 2021, though you can still pay if you wish. The deadline for submitting the VAT returns has not changed, i.e. it is one month and seven days after the end of the VAT period. 

If you are paying HMRC by direct debit and do not want to pay the VAT until next year, you will need to cancel the direct debit or HMRC will take the payment if VAT is due. Please ensure you cancel it in sufficient time so HMRC does not attempt to automatically collect on receipt of your VAT return. 

Working from home for the self-employed 

The self-employed can claim expenses which are wholly and exclusively for the purpose of your business. This means that when you work from home you may claim a measure of relief, which must be restricted for your personal use. Typically, you could claim a proportion of your costs for things like heating, electricity, Council Tax and mortgage interest or rent. 

Full guidance on what to claim can be found here.  

Know your numbers and project your cashflow 

During this difficult time, it is highly likely that you may have to make important decisions to help support your business and your cashflow now and in the future will play a key part. 

Ensure that you keep your accounting records up to date and that you work closely with your accountant. This is also the perfect time to consider updating your systems and start using some of the technology available to help you to save time and better understand your figures. 

If your accounts are up to date, you will be able to predict the demands on your future cashflow and forecast what funds your business and, more importantly, you and your family may need over the next few months.  

Funding availability during the pandemic 

Most major banks have said they have options available should businesses experience any temporary setbacks as a result of coronavirus affecting their business. 

You should also consider alternative lenders who may be able to help you in the short term. 

If your income falls, discuss a mortgage holiday with your bank. It is important to note that the sum owed remains and the mortgage continues to accrue interest during this period. 

On 4th May the Government launched its Bounce Back Loan Scheme, designed to help small businesses needing financial help during the coronavirus pandemic. Giving them access to loans from £2,000 up to 25% of their turnover with a maximum loan of £50,000. To apply for a Bounce Back Loan, businesses need to complete a short application form on a lender’s website, which self-certifies whether they are eligible.

Business Rates and Cash Grants 

To help businesses, the Governments of England, Scotland, Northern Ireland and Wales announced a series of Business Rate and Cash Grant packages to help them through the coronavirus outbreak. To find out more please visit our page dedicated to these packages

Support for employers

If you are also an employer and want to understand the key points you need to consider during the COVID-19 pandemic, please read our dedicated guidance page here.

Want to know more? 

To find out more about what support is available for the self-employed during the coronavirus outbreak, you can watch our webinar here.

As the situation is changing rapidly, we expect that further announcements will follow. We will continue to monitor and will update you as more information becomes available. 

For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information. Make sure you sign up to our email newsletter to receive the latest updates straight to your inbox.


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