Is self-employed assistance coming? Updated as at 26 March 2020
- Provisions for the self-employed are being debated in Parliament today as part of the draft Coronavirus Emergency Bill. Initial indications are that a similar system to that benefitting employees is being considered, with the amount to be paid being based on a percentage of the lower of:
- your average earnings over a fixed period of time (possibly 3 years)
- a fixed amount (around the £2,900 mark)
- The Chancellor is stressing the difficulty of setting up a brand new scheme. The Guardian is reporting he is playing down the prospect of such a scheme being available imminently. This mirrors our message that there is going to be period where you will need to hold your nerve and plan. As we say, this is still being considered in Parliament and is not published guidance from the Government or HMRC.
We have not heard anything regarding directors in close companies as yet, and whether they will fall under this legislation. Please speak to us before deciding to cease your director salary, as it might not necessarily be the right decision at this time. As usual, there are other factors to consider.
*UPDATE as at 26 March 2020*
The Self-employed Income Support Scheme has been announced today (26 March 2020) by the Chancellor .
It will be open to those who have been adversely affected from the outbreak.
Those affected will receive 80% of average monthly profit over the last 3 years, up to £2,500 per month, as a taxable grant. If there are less than 3 years of tax return submissions, then an average of what has been reported will be taken.
The scheme will be open for 3 months, and it will be extended if necessary.
Rules on those eligible:
- Trading profits up to a maximum of £50,000.
- Majority of income must be from self-employment.
- Must have submitted a tax return for 2018-19.
Access to the scheme will be from no later than beginning of June. We appreciate that June is still a long time.
HMRC will contact you and ask you to fill out form, and will then pay directly into your bank account.
If you are late filing your 2018-19 tax return, you have until 23 April 2020 to submit.
So, what other Government assistance is out there until June?
Taken directly from The Government’s own guidance on the new Self-employed Income Support Scheme it directs readers to review the following alternative sources of assistance:-
- deferral of Self Assessment income tax payments and VAT payments
- grants for businesses that pay little or no business rates
- increased amounts of Universal Credit
- Business Interruption Loan Scheme
Close companies and directors
Whilst nothing was expressly said by the Chancellor about close companies and directors, it doesn’t look like they are included. The Self-employed Income Support Scheme guidance points directors of their own business towards the Job Retention Scheme (however if you click the link it goes to the Coronavirus Business Interruption Loan Scheme). You could therefore infer that they are not going to benefit. Please see our previous post on the Job Retention Scheme here, because going on the information we currently have, it is not exactly clear cut that directors fail under the Job Retention Scheme either. As soon as we know more, we will update you.
It was hinted by the Chancellor in his address that the tax rates will be equalised in future. A point not to be ignored for when everything settles down again.
If you are new to Revel and are keen to find out more, please call our consultant Will Bolter FCCA MAAT ATT (our designated COVID-19 response advisor) on 07379 451484 or contact us by email here.