Advice for the self-employed during the coronavirus outbreak

Claims for the fourth grant closed on 1st June 2021. A 5th and final grant will be open to claims from late July.

Self-employment Income Support Scheme  

The Government's Self-Employment Income Support Scheme (SEISS) provides self-employed individuals or members of a partnership that have been adversely affected by coronavirus financial support by way of taxable grants. 

Four grants have been made available so far. The first two grants covering the period from March to August 2020, and a further two grants for the period from November 2020 to April 2021. Claims for these earlier grants are now closed.

The fifth SEISS grant, covering May to September 2021, will be based on either 80%  30% of three month’s average trading profits.

A significant change is that the fifth grant will take into account how much a business’ turnover fell in 2020/21:

• Where turnover reduced by 30% or more, the grant will be worth 80% of three months’ average trading profits (capped at £7,500).  
• Where turnover reduced by less than 30%, the grant will be worth 30% of three months’ average trading profits (capped at £2,850). 

It is expected that claims will open in late July and be available until 30th September 2021. HMRC will contact eligible individuals from mid-July to give them a personal claim date. As with previous grants, the claim will be made via the HMRC portal.

Further information on eligibility and calculating the fifth grant can be found here.

Self-employed Income Support Scheme – what you need to know

Please note the details below apply only to the fifth grant.

Key details about the Self-employment Income Support scheme are as follows: 

• The grant will be available to self-employed individuals or partnerships.
• The grant amount  will depend on how much the business’s turnover fell in 2020/21:
  * ​Turnover down by 30% or more – grant will be 80% of three month’s average trading profits, capped at £7,500.
  * Turnover down by less than 30% - grant will be 30% of three month’s average trading profits, capped at £2,850.
• You must have traded in both the 2018/19 and 2019/20 tax years.
• You must have filed a tax return for 2019/20 as self-employed or a member of a trading partnership by 2nd March 2021. 
• HMRC will use the average trading profits from tax returns in 2016/17, 2017/18, 2018/19 and 2019/20 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 2019/20 or the average of the tax years 2016/17, 2017/18, 2018/19 and 2019/20.
• You must either:
  * be currently trading but are impacted by reduced demand due to coronavirus; or
  * have been trading but are temporarily unable to do so due to coronavirus
• You must also declare that you:
  *  intend to keep trading in 2021 to 2022.
  *  reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1st May 2021 and 30th September 2021.

Deferring tax payments 

Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan. It also has 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.  

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. 

Previously, the Government launched a Bounce Back Loan Scheme to help small businesses needing financial help during the coronavirus pandemic. 

The final application date for support under the Bounce Back Loan Scheme was 31st March 2021, and after that date a new Recovery Loan Scheme (RLS) became available

UK businesses of any size can apply for loans or overdrafts from £25,000 to a maximum of £10 million until the end of this year. Invoice and asset finance will also be made available to provide finance worth between £1,000 and £10 million.  

Finance under the new scheme will be backed by an 80% Government guarantee to encourage banks to continue to lend confidently.  

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.

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

 

Date published 3 Apr 2020 | Last updated 13 Jul 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.