If you have recently become self-employed, you may be wondering what support is available to you during the coronavirus pandemic. The Government have 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.
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 23 April
- 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.
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.
What can I do?
If you are recently self-employed and have lost earnings due to the COVID-19 outbreak, there are some things to consider. If you are eligible for the SEISS, you will be contacted by HMRC directly –they have started the process of contacting all of those eligible and you should hear by the middle of May 2020.
You may be able to apply for a coronavirus Bounce Back Loan. This is a temporary loan scheme, but it’s not guaranteed that you’ll be eligible for it. Eligibility factors include whether you’re based in the UK; that the business was established before 1st March 2020; and that your business has been affected negatively by coronavirus i.e. you’ve lost earnings from the situation.
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. A maximum loan of £50,000 is available. Without fees or interest in the first 12 months, the Bounce Back Loan Scheme (BBLS) differs from ‘normal’ bank loans – however interest rises to 2.5% once the 12 month period is over.
The most appropriate course of action, if you are receiving little to no work due to the pandemic, is to apply for Universal Credit. There is a step-by-step process on the government’s website to show you how to do this. However, remember that there are strict criteria for being eligible for Universal Credit, including taking into account what your partner or spouse earns, which may mean you cannot claim anything at all.
With regular updates being made to the support being offered by the Government during the coronavirus pandemic, we are keeping our Coronavirus Support page regularly updated as we hear more from the Government.
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.