If you have recently become self-employed, you may be wondering what support is available to you during the coronavirus pandemic. The government has announced an unprecedented support package for businesses and their employees, but what about for you?
For the self-employed, there is the Self-Employment Income Support Scheme (SEISS). But what is the scheme, and are you eligible? Read on to find out more.
On the 5th November, the Chancellor announced that the Self-Employment Income Support Scheme was going to be extended with two additional grants each over a three month period from November 2020 – January 2021 and February 2021 – April 2021.
What is the eligibility criteria of the SEISS?
- You must have lost profits due to Coronavirus
- You must have submitted your tax return for 2018/19 by the extended deadline of 23rd April 2020
- You must have evidence of self-employed income during the 2019/20 tax year
- You can continue to work, as you receive support – much different to furloughed workers, who are not self-employed
- You will be taxed on the grants
- You must have taxable profits of less than £50,000 for 2018/19 or taking the last three years as an average
In the simplest terms, if you have recently become self-employed in the UK, you will not qualify for the Self-Employment Income Support Scheme.
This is due to the government stating that those who have not submitted a tax return for 2018/19 cannot be eligible for the scheme, as they are concerned about individuals committing fraud. Without proof of being self-employed, which the government state the tax return would prove, you will not be eligible.
What can I do?
If you have recently become self-employed and have lost earnings due to the COVID-19 outbreak, there are some things to consider: the Coronavirus Bounce Back Loan (BBL) or the Coronavirus Business Interruption Loan Scheme (CBILS).
Coronavirus Bounce Back Loan (BBL)
If you’re recently self-employed, you may be able to apply for a temporary loan scheme – the Coronavirus Bounce Back Loan. Eligibility factors include:
- You must be a UK-based business
- The business was established before 1st March 2020
- Your business has been affected negatively by Coronavirus i.e. you’ve lost earnings from the pandemic
The scheme is set to assist smaller businesses, where they can borrow anything from £2,000 up to 25% of their turnover. You won’t be able to apply for the loan if you’re in the banking, insurance, or reinsurers sector, as well as public bodies and state-funded primary and secondary schools. The maximum loan amount is £50,000. Without fees or interest in the first 12 months, the Bounce Back Loan (BBL) differs from ‘normal’ bank loans – for the remainder of the loan term, the interest rate is fixed at 2.5% and there will be no early repayment penalties charged.
How can I claim this?
This scheme is provided through a network of accredited lenders and you will need to approach them directly online to apply for the loan. You can find the full list of accredited lenders here.
Coronavirus Business Interruption Loan Scheme (CBILS)
The Coronavirus Business Interruption Loan Scheme (CBILS) has been created to encourage finance providers to continue lending to small and medium sized businesses. The government will provide lenders with a guarantee of 80% on each loan and will support loans of up to £5 million. The government will pay interest and any fees for the first 12 months.
This scheme is available to:
- All UK businesses with a turnover of less than £45 million per year can apply for finance through this scheme
- Further eligibility criteria can be found here
- The application deadline has been extended to 31st January 2021
How can I claim the CBILS?
All the major banks will be able to offer the scheme so you should speak to your existing bank as soon as possible. Further details of the scheme and a list of lenders is available here.
The chancellor’s advice to recently self-employed workers is to look to the benefits system as their avenue of financial support. However, this comes with its own issues, due to universal credit only being eligible for certain individuals, dependent on a range of criteria. And if you are eligible, the maximum you may receive may be capped, which means you will be living off much less than your self-employment earnings. For more information about applying for Universal Credit, check out this step-by-step process on the government’s website.
If you require any advice or support in applying for financial support as a self-employed worker, please contact a member of our team, who will be happy to help with your query.