Self Employed: What about me – Part Deux?

Following the Chancellor Rishi Sunak’s announcements last night, we wanted to make sure we kept you updated with all the latest support measures. Party politics aside, please remember the help for the self employed is much harder to administer and deliver because unlike the other support announced to date, it doesn’t build on an existing infrastructure in the same way. To be frank it also doesn’t help everyone and is only coming in June, so it is far from ideal.

It is however a start, a step in the right direction and there maybe more measures to come or tweaking of current measures. The below is the best information we have at this point. We will of course keep you updated with any such changes here. This is also an update on our earlier blog, Self Employed: What about me?

Income support if self employed

A new Income Support Scheme will be set up for those affected by the Coronavirus, providing a taxable grant worth 80% of the self employed’s average monthly taxable profits over the last three years, up to £2,500 per month for up to three months, so it is now in line with the Job Retention Scheme to help employees. It will be available for at least three months and could be extended if needed. However, if you don’t have three years records, we understand the Government will consider anything you have.

Government guidance is constantly being updated and can be found here.

Claiming income support for self employed

The Chancellor believes that this will be available for 95% of the Self Employed and will be available from early June (as three months lump-sum), if not before.

This will be available for:

• Those with trading profits worth up to £50,000;
• Where the majority of income is from self-employment;
• Only those already in self-employment who have tax returns for 2018/19;
• If you failed to submit your 2018/19 tax return on-time you have four weeks to correct this; and
• Will be provided even if you are still able to work, unlike the employee scheme.

If you or anyone you know need help with submitting your 2018/19 tax return, we would be delighted to help you here.

How do I apply for income support?

HMRC will contact eligible individuals directly, so keep an eye out for this. They will ask you to populate an online form and they will then transfer any payments directly into your bank account.

Whilst we haven’t seen the online form ourselves yet, we will look to support and help you with this, if we are able to and it is of interest to you.

Can I claim income support as a company director?

Essentially the Government have taken the legal definition of self employed here and considered Directors of limited companies, many of whom are also employees of the limited company, for tax reasons, as employees and not self employed.

Based on the eligibility criteria here, it appears clear that Directors of Limited companies will not be covered by this. It appears the Government is looking for them to put themselves on furlough then claim through the Job Retention Scheme. As many are on very low salaries here, 80% of this will be of little benefit to them, so we are hoping the Government revise their position here.

The idea that a Director by their very nature can be on furlough, due to the very nature of their responsibilities is at best odd, but we understand that the Government want as many individuals covered as possible through the furloughing, so are more flexible in their thinking here. For example, if you have let someone go already, they would be open to you retaining them and claiming the payment through furlough, as this is a vehicle to help people and there would be nothing wrong with doing this, indeed they might even encourage it.

Other entitlements to consider

There are other existing measures which can help you here, including:

• Rates relief and Grants – which is supposed to be live now, although we haven’t see any cheques yet;
• Business Interruption Loan – apparently there have been 30,000 enquiries already, but even getting through to the Banks currently is proving difficult;
• Second Payment on Account – due to be paid 31 July 2020 is deferred to 31 January 2021;
• Universal Credit – enhanced for the self employed, as is Housing Benefit. However, on Wednesday the Department for Work & Pensions (DWP) confirmed that they had taken 477,000 applications in the first nine days, so there is a bit of a wait here. They are however, reallocating staff to process these applications quicker and advances are offered to applicants (but don’t forget these will need to be paid back).
• Coronavirus Tax Helpline – so they can arrange payment plans even beyond what the time to pay agreement might offer.
• VAT Deferral – if you are VAT registered.
• PAYE Relief – if you have employees.

Additional tips

At this difficult time we all need to come together to support and help one another. Other than the above schemes, there are also a few things you might be able to do to help your business, above and beyond the government schemes mentioned above. These can include:

• Act now, plan, prepare and be ready, whatever the scenario;
• Prepare cashflow models for your business, to understand how your position is looking and when your issues will arise under different scenarios;
• Go through your profit and loss account; are there any costs you can strip out? Today, next week, next month? Do you need to set the ball-rolling now, especially as some services require a notice period?;
• If you have a landlord (for business or personal) talk to them and see if there is any flexibility in your current arrangement. They are potentially getting relief, maybe they can pass this along to you to keep you as a tenant?;
• Manage your debtors and creditors. Don’t pay anyone before you need to and get money in from your customers as quickly as you can. Maybe look to see if you can extend credit terms, payment days or put things on direct debit to spread payments and ultimately improve your working capital;
• If you have any lenders, keep communicating. If you are going to have any issues with payment, the earlier you communicate the better. However, you never know, they may be able to accept delay payments, payment holidays or potentially even extend your current facility to you. Again, they might be getting some help here, so maybe they can pass this over to you.

We have also written blogs on What To Focus On During Coronavirus ‘Lockdown’? and 5 Top Tips For Effective Remote Working: From Self Care To Maintaining Productivity, which might be of interest to you.

Black and White Accounting

This is a difficult time for everyone and we must come together to get through this. Our thoughts are with you, your family and your friends especially at this time.

If there is anything we can do to help you at this difficult time, please do get in touch by contacting Black and White Chartered Certified Accountants, populate the “Got a Question” form on the right, or call us on 0800 140 4644.