This is understandably an extremely stressful and uncertain time for the whole UK population, so we are now looking to our Government for help. The Chancellor, Rishi Sunak, has announced a number of measures to help employees and small businesses through the tough economic time ahead, but what help is there for the self-employed population? This information is changing daily, but here is what we know right now:
Self-Employed Income Support Scheme
This new scheme was announced by the Chancellor on 26 March 2020. The scheme allows self-employed individuals to get a taxable grant of 80% of their averaged taxable profits over the past 3 years (capped at £2,500 per month), and the grant will be back dated to 1 March 2020. For more detailed information on this scheme and to see if you qualify then please see “Self-Employed Income Support Scheme“
Self Assessment Payments on Account
Each year the self-employed are required to make payments on account in respect of their potential income tax and national insurance liabilities for the next tax year on the 31st January and the 31st July as follows:
|2019/20 Tax Year||31/01/19 – first payment on account|
31/07/19 – second payment on account
31/01/20 – balancing payment of liability
|2020/21 Tax Year||31/01/20 – first payment on account|
31/07/20 – second payment on account
31/01/21 – balancing payment of liability
On 20 March 2020 the Chancellor announced that the second payment on account that is due to be paid on 31st July 2020 can now be deferred until 31st January 2021.
This measure was taken to help cashflow. The Government expect you to use that money to help fund your costs of business and living over the coming months, and then only pay the balance of what you actually owe for the year on 31st January 2021, when the nation should be over the current Covid-19 (Coronavirus) pandemic.
3 Month Mortgage Breaks
Home owners have been allowed to claim a 3 month break on their mortgage payments, which should help to relieve the immediate pressures of household payments when they are struggling to find income.
Again, it is important to understand that this break does not release you from 3 months’ worth of mortgage repayments, it only defers your payments. Hence your mortgage term will be extended by 3 months. The idea is to help your cashflow in the short term whilst the economy is struggling.
Increase in Housing Benefit
On 20 March 2020 the Chancellor, Rishi Sunak, announced that housing benefit payments will be increased to help with those struggling to pay their rent. The Department for Work and Pensions have confirmed that if you are already in receipt of this benefit then no action is needed by you to claim the additional funds, you will just notice an increase in your payments.
Employment and Support Allowance (ESA)
Under the legislation regarding ESA payments, self-employed individuals are entitled to claim ESA from day 8 of their absence from work due to sickness. On 11 March 2020 the Chancellor announced that if the reason for sickness is self isolation as a result of Covid-19 (Coronavirus) then you will be entitled to claim the payment from day 1 of your isolation period. This is a payment of £73.10 per week if you are over the age of 25.
It was announced on 20 March 2020 that the minimum income floor for Universal Credit (UC) will be temporarily removed, thereby making the benefit more accessible to the self-employed. This payment is made at the same rate as statutory sick pay (SSP) which is currently £94.24 per week and is due to increase to £95.85 from 6 April 2020.
Business Interruption Loans
On 11 March 2020 the Chancellor announced a Government backed loan scheme called the “Business Interruption Loan Scheme” that would be put in place within a matter of weeks to allow business owners instant access to funds that could be used to fund their business expenses. These loans would be interest free for 6 months.
On 20 March 2020 the Chancellor confirmed that the loans, administered by the British Business Bank, would be available to access from Monday 23rd March 2020, and that the loans will now be interest free for 12 months, instead of the originally announced 6 months.
As it stands many of the measures currently put in place by the Government are based on deferral of payments, and not relief or exemption from payments. It appears that they are hoping for the nation to be over the Covid-19 (Coronavirus) pandemic in the next 12 weeks, and hence businesses should be doing all they can to get back to normal after that point.
In the meantime we would suggest taking all the practical steps you can to mitigate the effects that the current economic uncertainty will have on your business and your life. For help and advice please read our article 8 Steps To Help Your Business Weather the Covid-19 Storm.
We will be updating this information as soon as we can after it is released, but in the meantime if you do need accounting help then please don’t hesitate to contact us on email@example.com or 01634 540340.