For those who are self-employed the announcement of a support package took some time to be announced while the government explored how best to implement it, taking into account complexities around earnings and ensuring that those who have contributed to the system, benefit from it.
Now that some of the finer details have come to light, we are sharing more insight into the Self-Employment Income Support Scheme (SEISS) and what it means for those who are self-employed in our latest blog.
Self-employment Grants
Grants are available to self-employed for up to 80% of profits and is capped at £2500. As it is a grant you don't have to pay it back, but it is taxable. However, what you receive will be based on your profits over the last three years.
There are some limitations to this such as;
- Your average trading profit must be less than £50,000 per year. If you exceed this you cannot claim support.
- You must have filed a tax return for 2018/2019. If you have missed the deadline you have until the 23rd April 2020 to get it filed to be able to access the scheme.
- You must earn more than half your total income from self-employment and this must be the case either your 2018/2019 tax return, or if not the average of your 2016/17, 2017/18 and 2018/19 tax returns.
- Unlike the employee scheme, you can continue to work although you may need to demonstrate that you have lost trading/partnership trading profits due to COVID-19, but remember you will need to declare your earnings on your next self-assessment
Grants are expected to roll out in June and will likely be backdated to cover March, April and May (in the form of a lump sum). At this stage it is set to last for at least three months, but could be extended.
If you are eligible for the scheme, there is nothing you need to do at this stage. HMRC will contact you directly once the Self-Employment Income Support Scheme is operational, at which point you'll be asked for fill in an online form and the grant will then be paid directly into your bank account.
Deferral of tax payments
One of the first announcements made by Chancellor Rishi Sunak, was that any self assessment payments due on July 31st 2020 could be deferred to the 31st January 2021.
While it didn't appear to be much support for the self-employed when initially announced amongst the measures the government was putting in place to support businesses and those on payroll, it does allows for an instant injection of cash to cover essential expenses.
There is no need for you to inform the HMRC of your plans to defer payment, but if you have a direct debit set up, ensure that you delete it to prevent the payment coming out of your account.
Remember, it does need to be repaid, but will not accrue any interest.
Payment on Mortgages & Rent
If you are concerned about your income during this period we recommend you take steps to minimise your outgoings where possible.
If you own your own home then mortgage lenders are currently offering a three-month mortgage payment holiday which may be worth exploring in order to minimise expenditure. But, remember that interest will accrue on the outstanding debt.
If you rent, then we recommend that you speak with your landlord at the earliest opportunity if you are concerned about being able to meet your rent payments. Agreeing how you will meet your obligations amicably will result in better outcomes all round and take immense strain and pressure off both yourself and your landlord, who may also been concerned about meeting their own financial obligations.
Landlords do also have the opportunity to take advantage of mortgage payment holidays, even with Buy-to-Let mortgages so they should be able to support you.
If you have a commercial mortgage or lease then the above would also apply.
If you need support sooner
If you are eligible for support from this scheme, but will struggle to meet you living expenses you could explore applying for a business interruption loan if eligible. Alternatively, you may be eligible to also apply for Universal Credit.
If you are still unsure how you might be affected or how you can access the relevant financial support, please contact us to discuss in more detail.