The government has announced a new Self Employed Income Support Scheme and details of the scheme are attached. Martin Lewis of Moneysavingexpert has posted a video which explains more about the scheme which you can watch here.
Self Employed Income Support Scheme (SEISS)
Under this scheme self-employed workers are able to apply for taxable grants to cover loss of income due to the coronavirus pandemic.
- The grants are worth up to 80% of your profits. This is capped at £2,500 a month and is taxable.
- Grants are based on your profits over the last three years. They are calculated by using your tax returns for 2016/17, 2017/18 and 2018/19 if you were self-employed over that period. If not, it'll be calculated from your 2018/19 tax return alone.
- You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. If you were due to file a 2018-9 tax return but missed the deadline this year, you'll have until 26 April to submit your tax return and then you can still access the scheme. However, if you only have a few months' self-employment on your 2018/19 return, this will be counted as your total profit for the year – the Government won't pro-rata it based on your monthly profits.
- You must earn more than half your total income from self-employment. This must have been the case for either your 2018/19 tax return or the average of your 2016/17, 2017/18 and 2018/19 tax returns (or both).
- Your average annual trading profit must be less than £50,000. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is £50,000 or more won't be able to get any support from this scheme.
- This scheme's expected to launch in June. Payments will be likely backdated to cover March, April and May. The scheme will operate across the UK and is set to last for at least three months, though this could be extended.
How do I apply for the SEISS?
- Those who are eligible for the self-employment support scheme will be contacted by HMRC directly – the Government hasn't said when this'll be, only that it will happen 'once the scheme is operational'. At that point you'll be asked to fill in an online form, and the grant will then be paid directly into your bank account.
- There's no need to contact HMRC now as there's nothing you can do to apply at this stage.
Not all self-employed people can access this help – for example, if you earn more than £50,000 per year or less than half of your income is from self-employment. If you don't meet the eligibility requirements unfortunately you won't be able to claim, but there are other things you can try:
- You can apply for a business interruption loan. The temporary Coronavirus Business Interruption Loan Scheme is open to self-employed people and offers access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. The Government could also give you a Business Interruption Payment to cover the first 12 months of interest and fees on the loan. The scheme is now open for applications, and is offered by all major banks. Read more on the Government's Business Support website.
- You can defer your income tax payments. If you have income tax payments due in July 2020 under the self-assessment system, you can defer them until January 2021. See Self-assessment tax payments delayed.
I am eligible but can't wait until June – what can I do?
If you are eligible for help from this scheme, it's unlikely you'll see any money until June at the earliest, which might be difficult.
In the meantime you could:
- try applying for a business interruption loan;
- apply for universal credit (for universal credit, the grant will be treated as earnings – but check if you can apply for support before it comes through); or
- use any money you had set aside for your July tax bill to cover immediate expenses until your grant comes through in June. This especially applies given the July self-assessment tax payment can be deferred until January 2021.
Delayed self-assessment tax payments
The government have announced that the next set of self-assessment tax payments will be delayed until January 2021, in a bid to help the self-employed.
If you pay the majority of your tax via self-assessment, you are likely to make two payments each year in January and July. The Chancellor announced that there will be no payment due in July this tax year, allowing people more time to pay their tax bill, or to be able to use the cash already saved towards it for more immediate expenses.
IR35 tax reforms delayed
Reforms which will lead to tax bills going up for many self-employed people have been delayed a year as a result of coronavirus. Changes to IR35 'off payroll working' rules – anti-tax avoidance rules – will now come into force in April 2021 instead.
The changes will mean every medium and large private sector business in the UK will become responsible for setting the tax status of any contract worker. In simple terms this means self-employed people working for a company will pay more tax. And the fear is that businesses will find the changes too complicated and use fewer self-employed people as a result. While the delay comes as a respite for some, it's been made clear they will still definitely go ahead in April 2021.