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Coronavirus money resources for self-employed workers

Coronavirus money resources for self-employed workers
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Coronavirus has impacted almost everything in our daily lives, from where we can go to what we can do, and even our jobs. If you are self-employed, coronavirus may have meant that you can’t continue your business. Or your volume of work may have dramatically reduced.

Support is available for self-employed workers affected by the coronavirus – from government grants to benefits. We’re here to break down what resources might be available to you.

For more ongoing coverage regarding the coronavirus pandemic, check out our coronavirus resources page.

Self-Employment Income Support Scheme (SEISS)

In May 2020 the government opened the Self-Employment Income Support Scheme (SEISS). If you are self-employed and have been negatively impacted by coronavirus, you can claim a grant of up to 80% of your average monthly trading profits.

The grant will be based on your average monthly trading profit over the tax years: 2016 to 2017, 2017 to 2018 and 2018 to 2019.

Once your average has been calculated, you will be paid a single instalment to cover three months. The total maximum you will be able to receive is £7,500. HMRC’s online service will inform you of your grant amount.

There is no need to repay the grant, but it will be subject to income tax and self-employed National Insurance.

In order to be eligible for the SEISS, you must:

  • have traded in the tax year 2018 to 2019 and have submitted a self-assessment tax return on or before 23 April 2020
  • have traded in the tax year 2019 to 2020
  • intend to trade in the tax year 2020 to 2021
  • carry out a trade that has been adversely affected by coronavirus (although there is no need to provide proof)
  • have profits for 2018 to 2019 of no more than £50,000.

If you are eligible for the grant, the likelihood is that you have already been contacted by HMRC. However, if you have not heard anything yet, you can check whether you would qualify through gov.uk.

The SEISS is there to support self-employed workers. However, unlike the furlough scheme, which has been extended to October 2020, there is no indication that the SEISS will be extended beyond May.

If you need further support, a few other options are available to you.

Deferred income tax and VAT payments

One other option that has been made available to those who are self-employed is the ability to defer upcoming income tax and VAT payments.

You are able to do this if you are registered in the UK for self-assessment and if you are finding it difficult to make your second payment by 31 July 2020. There is no need to tell HMRC you’re deferring your payment. HMRC will not charge interest or penalties on any amount deferred.

Business Interruption Loan Scheme

If you are self-employed and affected by the coronavirus, you may want to take advantage of the Business Interruption Loan Scheme. This provides access to loans and other finance of up to £5m for SMEs. The government has pledged to guarantee 80% of the finance to the lender and pay interest and any fees for the first 12 months.

In order to be eligible for the scheme, your business must be based in the UK and have an annual turnover of up to £45m. You will also need to show that your business would be viable if it were not for coronavirus.

Bounce Back Loan

Another potential option if you are self-employed and struggling during the coronavirus outbreak is the government’s Bounce Back Loan. This scheme is designed to help SMEs borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan. There won’t be any fees or interest payable for the first 12 months. After 12 months, the interest rate will be 2.5%.

To be eligible to apply, your business must be based in the UK, have been established before 1 March 2020 and have been adversely affected by coronavirus.

Universal Credit

There are also non-coronavirus specific benefits available if you are self-employed and struggling. For example, if your income as a self-employed worker has dramatically dropped during the coronavirus outbreak, you can apply for Universal Credit. Your payment will be based on your actual earnings. You will therefore need to report any self-employed earnings and expenses at the end of each monthly assessment period.

You can receive up to a month’s advance upfront, without having to physically attend the Job Centre.

The good news is that you can apply for both Universal Credit and SEISS. However, if you receive an SEISS grant, your level of Universal Credit may decrease as a result.

Employment and Support Allowance (ESA)

If you are self-isolating or shielding, and therefore unable to work, you could be eligible for Employment and Support Allowance. During the coronavirus outbreak, the usual seven-day wait for new claimants won’t apply. Instead, you should receive your allowance from day one.

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