Support for the Self-Employed

Update 6 May 2020

The self-employed income support scheme (SEISS) will be open for applications from 13 May

Rather frustratingly, HMRC has decided against allowing tax agents to submit applications on their client’s behalf.

From 4 May HMRC is contacting taxpayers who it believes are entitled to claim an SEISS grant, telling them to be ready to claim when the portal opens on 13 May. HMRC are contacting taxpayers by email and text and only by letter where they do not hold the aforementioned details.

We are aware of a number of scam emails being issued. HMRC will only contact you to notify that taxpayers may be eligible for the grant. Any form of email or text asking for personal details should be ignored

Taxpayers will be required to have the following information available when making their claim:

  1. Self Assessment UTR
  2. National Insurance number
  3. Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online.
  4. Bank account number and sort code you want the grant paid into.

Update 26 March 2020

The Government has today announced the long-awaited support packages for self-employed workers. The details of the scheme remain patchy and we shall provide further updates in due course. However, the following is a summary of the support that will be provided.

Self-employed workers can claim a taxable cash grant of 80% of their average monthly profit for the past three years. This is capped at £2,500 per month.

The support will be capped for taxable profits of £50,000 per annum.

To clarify the Chancellor’s comments. The scheme will be based on the tax year 2018/19 and previous two years. Claimants will not be required to submit their tax return for 2019/20.

The Government has offered a concession to any tax payer who has not yet submitted their 2018/19 tax return. This can be now be submitted within the next four weeks without incurring a late filing penalty.

Claimants can also continue to work whilst claiming the grant – this is different to the rules for furloughed employees who are unable to work.

The grant will be paid directly to claimants but payments are not due to commence until June 2020.

It is probably this final point which will cause the greatest distress to the majority of eligible claimants. For the average self-employed worker, having to wait until June 2020 to receive the grant will seem like an awfully long time and many may not manage. The Chancellor acknowledged this concern and conceded that any self-employed worker who requires money before the grant payments commence is eligible to apply for Universal Credit.

Details of how to apply for the grant will be issued by the Government shortly.

Furloughed Employees

Further details of the employee furlough scheme have been announced, although at the time of writing, it has not yet been launched.

Based on the information available, we understand the scheme will operate as follows:

The scheme is to support any employer faced with laying off staff as a result of the impact of COVID19 on their business. It is intended to provide a payment to employers to cover 80% of their payroll costs to furlough workers rather than lay them off permanently.

The scheme will apply to all UK employers and will include, we expect, companies, partnerships, LLPs, charities and sole traders.

HMRC will reimburse employers for 80% of the wage costs (gross wage plus Employer’s NIC) for employees who are not laid off. This will be capped at £2,500 per employee per month. Employees stay on the payroll while they are furloughed. There is no cap on the amount that can be paid to a single employer.

The scheme will operate as a grant, rather than a loan, and funds should be available by the end of April.

The scheme will be administered via an online HMRC portal (not yet operational). Employers will register and submit details about their employees’ earnings.

Employment law regarding this matter is not clear-cut and depends on a furlough clause already being in the employee’s contract of employment. In the absence of such, employers will have to negotiate and obtain the consent of the employee. Failure to do so is risky and may lead to employees leaving and claiming unfair dismissal. Given the complexities surrounding the legal aspects of the scheme, we would recommend that employers consider taking appropriate professional advice.

Employees cannot request / demand to be furloughed. However, there is nothing preventing the employer seeking volunteers if this will save time engaging in a business-wide consultation process.

The period that employees can be furloughed is initially three months and can be backdated to 1 March 2020. The scheme may be extended at the end of the initial period.

Update 23 March 2020

Following the outbreak of the Coronavirus epidemic the Government has pledged a raft of financial packages to support business affected by the virus. We have prepared a summary of the key announcements and webpage links to enable you to find further information.

Please note the current landscape is changing rapidly and we cannot guarantee that any of the support packages will necessarily be available to your business. As with any form or Government support, your eligibility will depend upon your personal circumstances.

As the Government is making fresh announcements almost daily, we cannot guarantee this summary covers all the support that has been pledged so far. We will provide further updates as new information becomes available. If you would like to join our mailing list for these updates, please send an email to info@consortiops.co.uk or register for our newsletter here. https://consortiops.co.uk/register

Please also note that our website is being updated with news feeds. Please follow click here http://www.consortiops.co.uk/news to obtain the latest information.

Employees

Statutory Sick Pay

Following the recent budget, the rules on Statutory Sick Pay (SSP) have been relaxed. SSP is now available for any employee affected by the virus from day one rather than after the normal four days. Employers will receive the money “immediately”. Whilst the Government has not yet defined what they mean by immediately, we assume an allowance will be made as part of your employer’s RTI submission. We shall provide further clarification on this once the Government confirms the rules.

The new rule applies to all employees who are either infected by the virus or choose to self-isolate and is payable for a period of 14 days.

If an employer requires proof of the reason for the absence, employees can obtain the form NHS111 online without having to attend a doctor’s surgery in person.

Further information is available by following the link below:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

Redundancy packages

For employers facing the difficult decision to reduce headcount but are unable to fund the costs of redundancy, the Government may be able to assist with the cost through the Financial Assistance Scheme (FAS), run by the Government’s Redundancy Payments Service (part of DBIS).

Further information can be obtained by contacting the Redundancy Payments Helpline on 0330 331 0020.

Reduced working hours

As an alternative to redundancy, employers may consider reducing the working hours for employees, either in the short term or permanently if the company is subject to a permanent change.

Employment law is complex and the ability to amend an employee’s terms of employment is not always straight forward. We would always recommend that an employer seeks appropriate professional advice before embarking on this course of action.

Consultants at our sister company, Consortio HR (www.consortiohr.co.uk) are available to support you through this process if required.

Please contact us if you require any further information on this subject.

Self-Employed, Gig economy workers and Contractors

Thus far, the support pledged for this category of workers has lagged that pledged for SME businesses. As you may have seen in the media over the weekend, the Government is expected to announce today a raft of support for self-employed people. We will issue a further update once the mechanics of how any support pledged will work.

As things stand, our understanding of the support available is as follows:

  • Universal Credit (UC)

If you are self-employed and already claiming UC, the Government has relaxed the rules on minimum income which may make it easier to increase the amount of money you receive. If you are a new claimant, the reduction in the minimum income floor will mean you qualify for benefits earlier.

The Government has confirmed that new applicants for UC will receive benefits within 7 days rather than the normal 5-week delay.

If you are suffering from COVID-19, or self-isolating, you can apply for UC online without having to attend meeting at a job centre. Further details on applying for UC are available at the following the link:  
https://www.gov.uk/universal-credit 

  • Local Authority financial hardship fund

The Government has confirmed a £500 million fund which will be administered via local authorities. This will be used primarily to assist with council tax relief.

If you wish to make a claim on this fund you should contact the council tax department of your local authority.

  • Mortgage payments or rent arrears

If you are experiencing financial difficulties meeting your mortgage repayments because of COVID-19, you may be entitled to a mortgage payment holiday for 3 months. This will be subject to you already being up to date with your payments and not in arrears.

If you need to negotiate a mortgage payment holiday, you should contact your lender directly.

Property landlords

The Government has confirmed the payment holiday agreed by mortgage lenders will extend to property landlords who face difficulties because of tenants affected by COVID-19.

If you are a property landlord affected by the virus, you should contact your lender directly for further assistance.

If you are a tenant facing problems paying your rent, you should contact your landlord who will be able to negotiate a payment holiday with their lender. Emergency legislation will be introduced so that landlords will not be able to start proceedings to evict tenants for at least a 3-month period. This applies to private and social renters. At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

Personal finances

If you are experiencing difficulties paying personal loans or credit card bills as a result of COVID-19, you should contact your lender directly to negotiate a payment holiday or reduced payment plan.

Most of the major lenders have issued statements confirming they will look sympathetically on each case; however, as always, the terms of any proposal agreed will depend upon your own circumstances. If you agree a payment holiday with your lender, they should record it in such a way that will not impact on your credit score.

Small Business support

Business rates holiday for retail, hospitality and leisure businesses

Business rates for retail, hospitality and leisure businesses in England will be cancelled for the 2020 to 2021 tax year. Properties that will qualify for the relief are those being used wholly or mainly as shops, restaurants, cafes, drinking establishments, cinemas, live music venues, hotels, guest & boarding premises, and self-catering accommodation.

If your business qualifies there is no action for you to take. Your local authority will apply the rebate to your next council tax bill in April 2020. If you have already received your 2020/21 bill, the local authority may have to reissue it to exclude the business rate charge.

Cash grants for retail, hospitality and leisure businesses

A grant up to £25,000 will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000. If you consider your business is eligible, you should contact your local authority.

Support for businesses that pay little or no business rates

If your business already qualifies for Small Business Rate Relief (SBBR) or Rural Rate Relief (RRR), the Government will provide grants of £10,000 to assist with ongoing business expenses.

If your business already qualifies for SBBR or RRR or is eligible, you do not need to take any action. Your local authority will contact you in April once the funding is realised by the Government.

Bank Finance

Existing Facilities

If you have existing finance agreements with your bank or another lender which you are unable to pay as a result of the impact of COVID-19 on your business, you should contact your lender directly to negotiate a payment holiday, interest only period or other amendment. From what information we have been able to access, none of the support packages pledged by the Government guarantee the repayment of existing finance agreements.  

New Lending

The Government has announced a new (temporary) Coronavirus Business Interruption Loan Scheme. This will be delivered by the British Business Bank, but administered by the major clearing banks (Barclays, HSBC, Lloyds etc).

For those not familiar with this type of lending facility it operates in a similar fashion to the Enterprise Finance Guarantee scheme (EFG). This means that the Government guarantees to repay the lender 80% of the outstanding loan if the borrower cannot meet the repayments. In effect, the scheme protects the lender and not you the borrower. The aim is to make it easier for companies to borrow money as lenders’ risk is reduced to 20% of the amount of the loan.

It is likely this scheme will only apply to new loans and not be applied retrospectively to cover existing agreements.
The terms of this support package are:

  • the government will not charge businesses or banks for this guarantee,
  • the Scheme will support loans of up to £5 million in value, and
  • the first 6 months are finance interest free, as the Government will cover the first 6 months of interest payments.

You are eligible for the scheme if your business is UK based, with turnover of no more than £41 million per annum. In addition, you must satisfy additional criteria of the British Business Bank, details of which are available here by following the link below: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

If you wish to apply for a loan under this procedure, you should check that your current bankers are participating in the scheme (review their website) and apply directly to your bank. Alternatively, if your bank is not participating, you can apply for a loan or overdraft from one of the main clearing banks.  

Insurance claims

Businesses that have cover for both pandemics and government-ordered closure should be eligible to make a claim on their policy. The Government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

As insurance policies differ significantly, businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Working capital facilities

In addition to the supported loans schemes announced by the Government, several other lenders are offering support, primarily to provide working capital facilities. Each one has different lending / security criteria. If you have any specific requirements, please contact me by email with a summary of the following information:the amount required,

the purpose of the loan (i.e. to pay wages, purchase stock etc), and

details of any assets you may be able to provide as security (debtors, stock, unencumbered assets).