Self-employed – UK Government financial support

UPDATED 8 July 2020
If you are self-employed…
…the following provides a summary of the UK Government financial support packages that may apply to you.

Self-employed Income Support Scheme

• It will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.
• The first scheme provided a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month for an initial three months (March, April and May)
• HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
• The scheme is open to those where the majority of their income comes from self-employment and who have profits of less than £50,000.
• The grant is paid in one lump sum in June for the months of March, April and May. So, the maximum you can get is £7,500.
• Claims for the first grant must be made on or before 13 July 2020.
• The Chancellor has now announced a second scheme providing a further three months extension.
• Those eligible are able to claim a second and final grant capped at £6,570 (based on 70% of profits).
• Applications for the second grant will open in August.
• Further details included in the separate Self-employed Income Support Scheme document.

Newly Self-Employed Hardship Fund

• This applies in Scotland only
• If you became self-employed on or after 6 April 2019, you are not eligible for the UK Government scheme. So, you can apply for this scheme but there are still eligibility requirements.
• To be eligible you must:
  • have become self-employed on or after 6 April 2019
  • have lost revenue due to the coronavirus pandemic
  • have not been able to access support through other COVID-19 business support schemes

• You need to apply in your Local Authority area
• Successful applicants will receive a one-off payment of £2,000

Job Retention Bonus

• Launched 8 July 2020
• UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021Eligible for UK based SMEs established by 1 March 2020 and been impacted by the coronavirus pandemic.
• Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021.
• Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July 2020.

Coronavirus Bounce Back Loan Scheme

• Launched Monday 4 May 2020
• Eligible for UK based SMEs established by 1 March 2020 and been impacted by the coronavirus pandemic
• It will be interest-free for 12 months
• Thereafter the interest rate is 2.5% a year
• The Scheme is 100% underwritten by the Government and so the application process is expected to be streamlined
• Further details included in the separate Coronavirus Bounce Back Loan Scheme document

Coronavirus Business Interruption Loan Scheme

• Launched Monday 23 March 2020
• Eligible for UK based SMEs with turnover of no more than £45 million per annum (although all lending decisions delegated to the lending partners)
• The business must have a borrowing proposal which the lender:
  • would consider viable, were it not for the COVID-19 pandemic
  • believes will enable you to trade out of any short-term to medium-term difficulty
• It will be interest free for 12 months
• Further details included in the separate Coronavirus Business Interruption Loan Scheme document

Kickstart Scheme

• Launched 8 July 2020
• This is a £2 billion fund to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.
• Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

High quality traineeships for young people

• The government will provide an additional £111 million this year for traineeships in England, to fund high quality work placements and training for 16-24 year olds.
• For the first time ever, the government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee.
• The government will improve provision and expand eligibility for traineeships to those with Level 3 qualifications and below, to ensure that more young people have access to high quality training.

Payments for employers who hire new apprentices

• The government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021.
• These payments will be in addition to the existing £1,000 payment the government already provides for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.

VAT payments

• If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:
  • defer the payment until a later date
  • pay the VAT due as normal
• HMRC will not charge interest or penalties on any amount deferred as a result of this change.
• You will still need to submit your VAT returns to HMRC on time.
• HMRC will continue to process VAT reclaims refunds as normal during this time.
• If you choose to defer your VAT payment, you must pay the VAT due on or before 31 March 2021.
• You do not need to tell HMRC that you are deferring your VAT payment.
• If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.
• VAT payments due following the end of the deferral period will have to be paid as normal.
• Further information about how to repay the VAT you’ve deferred will be available soon.

Income tax payments

• If you’re due to pay a self-assessment payment on account by 31 July 2020, then you may defer payment until January 2021.
• You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
• The deferment is optional. If you are still able to pay your second payment on account on 31 July, you should do so.
• This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.
• During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.

Universal Credit

•  You may be able to get Universal Credit if:
  • you’re on a low income or out of work
  • you’re 18 or over (there are some exceptions if you’re 16 to 17)
  • you’re under State Pension age (or your partner is)
  • you and your partner have £16,000 or less in savings between you
  • you live in the UK
• You can apply for Universal Credit online. If you are eligible you will need to make an appointment for your new claim interview. This interview will take place by telephone with a work coach. You will be given the number to call to book this appointment when you have submitted your claim.
• The Universal Credit standard allowance and Working Tax Credit basic element will be increased for the next 12 months by £1,000 a year.
• This means that for a single Universal Credit claimant (aged 25 or over), the standard allowance will increase from £323.22 to about £406 per month.

Small business rates grant

• The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief.
• This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
• You are eligible if:
  • your business is based in England
  • you are a business that occupies property
  • you are receiving small business rate relief or rural rate relief as of 11 March
• You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Scottish Government support for business

• £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief.
• 1.6% relief for all properties, effectively freezing the poundage rate next year.

Northern Ireland Executive support for business

• COVID Small Business Grant – small business grant of £10,000 to be issued immediately. This is for all businesses with a NAV up to £15,000.

Top-up to local business grant funds scheme

• A discretionary fund has been set up to accommodate certain small businesses previously outside the scope of the business grant funds scheme
• This additional fund is aimed at small businesses with ongoing fixed property-related costs
• Local authorities are being asked to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates
• However, local authorities may choose to make payments to other businesses based on local economic need. The allocation of funding will be at the discretion of local authorities.
• Businesses must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to Coronavirus restriction measures.
• There will be three levels of grant payments. The maximum will be £25,000. There will also be grants of £10,000. Local authorities will have discretion to make payments of any amount under £10,000. It will be for councils to adapt this approach to local circumstances.

Landlords and renters

• From 26 March 2020, landlords will have to give all renters 3 months’ notice if they intend to seek possession (i.e. serve notice that they want to end the tenancy) – this means the landlord can’t apply to start the court process until after this period.
• This extended buffer period will apply in law until 30 September 2020 and both the end point, and the 3-month notice period can be extended if needed.
• This protection covers most tenants in the private and social rented sectors in England and Wales, and all grounds of evictions. This includes possession of tenancies in the Rent Act 1977, the Housing Act 1985, the Housing Act 1996 and the Housing Act 1988. After 3 months if the tenant has not moved a landlord needs to apply to court in order to proceed.
• Tenants are still liable for their rent and should pay this as usual.
• Landlords will be protected by a 3-month mortgage payment holiday where they have a Buy to Let mortgage.
• Landlords remain legally obligated to ensure properties meet the required standard – urgent, essential health and safety repairs should be made.

Personal credit

• If you need additional financial support because of coronavirus with an existing arranged overdraft, you will be able to request from your provider that up to £500, on your main personal current account, is provided at 0% for up to three months.
• You can ask for a three-month payment freeze or to pay a nominal payment on credit cards, store cards and catalogue credit.
• If you have a personal loan, you can ask for a three-month freeze if needed.
• On Friday 22 May, the FCA confirmed that it has proposed for these time periods to be extended for a further 3 months. Comments on this proposal have been requested by close of play on Tuesday 26 May.
• Further details included in the separate Regulatory support for individuals with consumer credit document.