What Government help is available for the self-employed as a result of COVID-19
For our employment team’s latest update on employees, read our last update here.
In light of the circumstances surrounding COVID-19, the Government announced in March that the extension of off-payroll working rules to the private sector will be delayed to April 2021. The changes were set to come into place on 6 April 2020 and have not yet been cancelled; the government has stated that it remains committed to introducing the rules to the private sector for reasons of fairness.
This will be welcome news for those organisations or individuals who were still to make the necessary operational changes ahead of IR35 coming in, and it should mean contractors face less uncertainty regarding their income in the short time than they might have otherwise. On the flip side, for those who were IR35 ready, simply reverting to ‘old’ arrangements and paperwork is not without hassle or risk. If you need some guidance on next steps, please get in touch.
Deferred income tax payments
Self-employed individuals will be able to defer their income tax self-assessment payments for six months, so payments due on 31 July 2020 may be deferred to 31 January 2021.
Anyone due to pay their second self-assessment payment on 31 July 2020 is eligible. No applications are necessary and no penalties or interest for late payment will be charged if you defer payment until January 2021.
Deferral is optional and if you are able to pay on 31 July 2020 it is recommended that you still do so.
Self-employment Income Support Scheme
On 26 March, the Government announced that eligible self-employed individuals will be able to apply to HMRC for a grant worth 80% of their average monthly trading profits, capped at £2,500 per month. You are eligible to apply if you:
- Have submitted a self-assessment tax return for the 2018-2019 tax year. This must be done by 23 April in order to be eligible to claim.
- Traded in the tax year 2019-20
- Are trading when applying for the grant or would have been but for COVID-19
- Intend to continue to trade in the tax year 2020-21
- Have been financially adversely affected by COVID-19
- Had trading profit of less than £50,000 in the 2018-19 tax year; or have average trading profit over the last three tax years of less than £50,000 a year
- Over 50% of your income comes from self-employment.
The current intention is that HMRC will use its records to identify those who are eligible and contact them and invite them to apply online. HMRC will then further contact applicants to advise how much will be paid and when. The monthly amount will be capped at £2,500 and will be paid directly into the person’s bank account in one instalment. The first payments are expected to be made by June 2020.
In addition, the Scottish Government recently announced that a further £100 million in grants will be made available for the newly self-employed, micro and SME businesses in distress (particularly in the creative, tourism and hospitality sectors) who are ineligible for other schemes. Applications are expected to open at the end of April, with grants being paid in May.
We would encourage all business owners do a quick check that they have applied for all loans and grants available to them by using the Government’s online tool which is available here.