News

Summary of Support for Self-Employed, announced last night

By Catherine Considine

As you are undoubtedly aware, the Chancellor, Rishi Sunak made an announcement on Thursday evening to include long awaited measures to help those in self-employment and we wanted to update you on those and how they might impact you. The main highlights of Thursday’s announcements are as follows:-
A new Coronavirus Self-employment Income Support Scheme (CSISS), will be available to help those who were trading in the last financial year, still trading now, and planning to continue doing so this year. The finer details of the scheme are not yet available however it is our understanding that:-
• The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
• Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.
• This scheme also applies to members of partnerships.
• More than half of a claimant’s income needs to come from self-employment.
• If the claimant has suffered a loss in income, a taxable grant will be paid to the self-employed or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
• HMRC will use the average trading profits from tax returns in 2016-17, 2017-18 and 2018-19 to determine the size of the grant.
• Initially, this will be available for three months in one lump-sum payment, and will cover the period 1 March 2020 to 31 May 2020.
• HM Revenue and Customs (HMRC) will use existing information to identify those eligible and will invite applications.
• The application will require them to confirm that they meet the eligibility requirements.
• It will be paid straight into a bank account, which eligible taxpayers will need to confirm on their application form.
• People do not need to contact HMRC now, if they are eligible HMRC will contact them directly.
• More details of the announcement can be found at : https://www.gov.uk/government/news/chancellor-gives-support-to-millions-of-self-employed-individuals

For those of our clients that operate through limited companies and pay themselves a small salary and dividends, the announcement has confirmed that you are not covered by this scheme. Instead, you will only be covered in respect of your salary element by the Coronavirus Job Retention Scheme if you are operating it through PAYE (please see our update on 23.03.2020 for details of this scheme).
Full details of the announcements that the government have made in relation to Covid-19 and businesses can be found at : https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
Other measures to help the self-employed
The above is in addition to the following provisions made under the welfare system, including Universal Credit, which were previously announced:
o VAT payments due by all VAT-registered businesses between now and the end of June will be deferred until 5th April 2021. VAT refunds and reclaims will be paid by HMRC as normal. We understand from this that VAT returns will still be requires to be submitted by the normal due dates. If you have a Direct Debit set up then this will need to be cancelled to stop HMRC collecting the payment. You will then need to reinstate this for the following quarter’s VAT payment.
o Income tax payments of self-employed taxpayers due on 31 July 2020 under the Self-Assessment system will be deferred to January 2021.
o Business continuity loans where you have a business bank account.
o The standard rate in both Universal Credit (UC) and Tax Credits will be increased by £20 a week for one year from April 6th.
o The ‘minimum income floor’ for the self-employed claiming UC is temporarily suspended for everyone affected by the economic impacts of coronavirus. This means that every self-employed person can now access, in full, Universal Credit at a rate equivalent to SSP for employees.
o There will be additional support for renters, through increases in housing benefit and Universal Credit.
o From April, Local Housing Allowance rates will pay for at least 30% of market rents in each area.