Here are our initial comments on the Chancellor’s announcement of additional support for the self employed.

You can also read the latest advice and guidance from government for businesses on it’s website page dedicated to the support for business during the Coronavirus emergency.

Please feel free to forward this information to anyone you think it may be of help to. I’m happy to support any business, client or not, in these difficult times.

As per previous updates, we are expecting continuing updates over the next few days and will be sending update emails as often as we can.

Help for the self-employed

Following today’s announcements by the Chancellor, the details for the self employed are as follows.

  • A taxable grant of up to 80% of the taxable profits, averaged over the last three years, based on the submitted tax returns;
  • Self-employment must form the majority of the annual income;
  • The above will be limited to trading profits up to £50,000;
  • The scheme is available to those who have submitted a 2019 Self-Assessment Tax Return

A four week window for non-filed 2019 tax returns to be submitted without penalties;

HMRC will contact the business direct and arrange for a form to be completed;

Monies will be paid direct into taxpayer’s bank account;

The funds should be available no later than the end of June 2020;

The self-employed can now access the Coronavirus Business interruption loans;

Access to Universal Credit in full, providing up to £1,800 per month based on circumstances;

The above measures have been designed following detailed discussion between the Government and the various trade bodies with the aim to bring the self-employed in line with furloughed employees.

One unanswered question is that there does not appear to be any specific reference to those who commenced self-employment post 6 April 2019.  These individuals may be entitled to the Universal Credit only.

As a reminder, some other practical help already announced for the self-employed, includes as the ability to defer VAT payments and the cancelling of the requirement to make the second payment on account for self-assessment by 31 July 2020 (This is just deferring payment, not reducing the liability). See below for further information.

Coronavirus Job Retention Scheme – updated information

Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. Employees to whom this applies, will be designated as furloughed.  During the period of being furloughed, employees (including Sole Director Companies) must not undertake any work.  Current guidance indicates that you cannot be “partially furloughed”.  The scheme is open to any employer in the country, and covers the cost of wages backdated to 1 March 2020 for the furloughed workers and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.

To claim under the scheme employers will need to:

  • designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.

Statutory Sick Pay (SSP)

If you’re a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.

The government will refund £94 per week, maximum £188, to your company.

It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.

If sickness absence occurs for non-coronavirus reasons, then the normal SSP rules apply.

VAT payments

The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.

The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.

Income Tax payment

Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.

Universal credit

Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.

HMRC Time to Pay

HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.