MSE News

  1. MoneySavingExpert.com
  2. News
  3. 2020
  4. April
  5. Coronavirus Self-Employed & Small Limited Company Help

Coronavirus Self-Employed & Small Limited Company Help

Your rights if you're self-employed, incl details of NEW support grants

Coronavirus Self-Employed & Small Limited Company Help
Amalia Illgner
Amalia Illgner, Money Reporter & Writer and Kit Sproson, Money Writer | Edited by Johanna Noble, Associate Editor
22 October 2020

The Self-Employment Income Support Scheme comprises of four grants. The first two have closed, but the third one will open on Sunday 1 November. It was initially set to be much less generous than the first two, but on Thursday 22 October the Chancellor announced that it'll now be worth up to £3,750 – twice as much as initially planned, although still not as big as the first two grants. But the excluded are STILL missing out. Read on for more about your rights as a self-employed person and what support's out there, including help for limited company directors.

Important: The info below is the best we have currently, but as this is a fast-changing situation we're updating this guide all the time. If you've a question that isn't covered below or in the other coronavirus guides, please email it to us (we can't respond with personal advice but we'll try to add answers in these guides).

Looking for other help? This guide has info for the self-employed. We also have...
- Coronavirus employees' help for the latest on the new Job Support Scheme and furlough.

- Coronavirus universal credit & benefits for the latest on universal credit and other help.
- Coronavirus finance & bills help for the latest on mortgages, rent, debts and household bills.
- Coronavirus life in lockdown for the latest on restaurant discounts, train tickets, MOTs etc.
- Coronavirus travel rights for the latest on holidays and refunds.

 

Plus we've specific help on: Wedding cancellation rights | Ryanair refunds | Static caravan fee refunds | Discounts for NHS staff | WFH tax reclaiming | I'm self-employed – can I claim my business is 'adversely affected'? | Bounce Back Loans | Payment holidays

In this guide

Updated. Self-Employment Income Support Scheme – here's how ALL the four grants work

The Self-Employment Income Support Scheme (SEISS) is made up of four taxable Government grants for self-employed individuals whose businesses have been adversely affected by coronavirus. There were initially only two grants (these two have now closed), but last month Chancellor Rishi Sunak announced that a third and fourth grant would be rolled out.

This means that Government support for the self-employed will now be extended until 30 April 2021. However, the extension means there is now effectively 12 months' worth of support over a period covering 14 months – here's what Martin has to say on that.

The four grants are similar. The main differences are when they're available, how much they're worth and stricter eligibility criteria for the third grant compared to the previous two (more on this below). While the third grant was set to be much less generous than the previous two, on Thursday 22 October the Chancellor announced that it would be extended to be worth up to £3,750 – up from £1,875. While a big difference, it's still only worth around half of the second grant.

So here's the lowdown on how they work:

How much can I get? 

  • BOOSTED BUT STILL LESS GENEROUS THAN GRANT 1 & 2. Grant 3: 
    - When is it available? It's not open yet, but will cover the period from 1 November 2020 until 31 January 2021.
    - How much can you get? A lump sum covering 40% of three months' worth of average monthly profits up to a total of £3,750 – this is up from a max of £1,875 (so 20% of profits) initially announced. The eligibility criteria has become stricter for this grant and you will be asked to declare that your business has been impacted between 1 November 2020 and the date of your claim (more on this below).
  • Grant 4:
    - When is it available? It's not open yet, but will cover the period from 1 February until 30 April 2021.
    - How much can you get? The Government has not confirmed the amount or any other details (it will review it and set it in due course).
  • Grant 1 & 2 are now CLOSED. This is how they worked:
    - Grant 1. It was available from 13 May to 13 July 2020 and was worth up to £7,500 in total. This was made up of 80% of three months' worth of average monthly trading profits capped at £2,500/mth.
    - Grant 2. It was available from 14 July to 19 October 2020 and was worth up to £6,570 in total. It was made up of a single payment made up of 70% of three months' worth of average monthly trading profits over three months, capped at £2,190/mth.

What is the eligibility criteria for the third grant? 

The eligibility criteria for the third SEISS grant is similar to the first two, though it is stricter in some areas. The Government has left room to tweak the eligibility criteria for the fourth grant, so we don't know yet how that one will work.

For now, to make a claim for the third SEISS grant, you need to fulfil the following criteria...

  • New. You must declare that your business have been impacted by REDUCED DEMAND due to Covid-19 in the qualifying period. This differs from grant 1 and grant 2, where any adverse impact due to Covid-19 would mean you qualified for the scheme. This means you can NO longer make a claim for self-isolating or shielding, which would have made you eligible for grant 1 and grant 2.

The remaining criteria ALSO applied to grant 1 and grant 2:

  • You must have filed a tax return for 2018/19. This means you must have been self-employed prior to 6 April 2019. The last possible moment to file a 2018/19 tax return was 23 April 2020 (the deadline had been extended from 31 January 2020). If you only had a few months' self-employment on your 2018/19 return, this is counted as your total profit for the year – the Government won't pro-rata it based on your monthly profits.
  • You must earn more than 50% of your total income from self-employment. To check this, HMRC will first look at your your 2018/19 tax return to see if it was the case then. If you're not eligible based on 2018/19 alone, it will then look at the tax years 2016/17, 2017/18 and 2018/19 to see if the average of your trading profits across the three years were more than 50% of your total income.

    Income from property, dividends, savings, pensions and taxable benefits all count as "non-trading income" and, to qualify for the SEISS, the total of these combined must NOT exceed 50% of your total income. Confused about what counts as "taxable income"? Here's our full list.

  • Your average trading profit must be less than £50,000/year. This is essentially a 'cliff-edge' requirement – so those whose average annual trading profit is more than £50,000 (to be specific, £50,000.01 and above) won't be able to get any support from this scheme.

    Again, HMRC says it will first check your 2018/19 tax return – if you met the requirements that year, you'll be eligible. However, if you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, it'll check your 2016/17 and 2017/18 tax returns if you filed them for those years. If on average over the three years you earned less than £50,000 and made more than half your income from self-employment, you'll be eligible. See more info below if you made a loss.

  • You CAN keep working if you claim the grant. You do not need to prove coronavirus impact, though you need to declare your business has been impacted for the period you're claiming for. HMRC will check for fraudulent claims.

  • You don't need to have applied for an earlier grant to get the others. As long as you meet the eligibility criteria, it is possible to apply for just one or any combination of the four grants.

  • You can also apply for and get universal credit (SEISS doesn't make you ineligible). But once you start receiving self-employed income support too then this will be classed as income, meaning the amount of universal credit you receive will decrease. But you will NOT have to pay back previous months of universal credit because of your SEISS payment. If you can wait, in some cases it could be worth delaying your SEISS application to maximise your universal credit award. We have all the details in our Coronavirus Universal Credit & Benefits guide.
  • You must be actively trading and intend to continue to trade. You will need to declare that you are trading and intend to continue to trade when you apply.

  • You can claim the grants on top of local lockdown payments. You can get both, however you must be trading and intending to continue to trade at the time of application for the SEISS grant.

The SEISS has been extended, but there are two 'missing months'

When the Government first announced the SEISS grant, its own press release from 26 March 2020 stated: "The income support scheme... will cover the three months to May," ie, March, April and May.

Then it announced a second grant covering another three months' worth of trading profits. Logic (and basic counting) would suggest that this second three-month grant would cover June, July and August – but to get this you strangely had to declare your work was impacted only after mid July.

But after initially setting out that the three-month grants corresponded to actual specific months of business disruption, HMRC then said that the grants don't relate to specific months after all. They are just grants, it said, though each is based on three months of trading profits.

Now a third grant kicks in on 1 November 2020 and runs until 31 January 2021, and a fourth will run from 1 February 2020 to 30 April 2021. Each covers three months' worth of support.

So do the maths

That's a 12 months of grants in total to cover 1 March 2019 to 30 April 2021, a total of 14 months. That leaves two months missing, which in our view are September and October.

How to apply for a SEISS grant

You need to apply via the official Government claims portal. Not sure you're eligible? The application will tell you if not.

To apply, or check, you need the following information:

  • Self-assessment unique taxpayer reference (UTR) – if you do not have this, find out how to get your lost UTR
  • National insurance (NI) number – if you do not have this, find out how to get your lost NI number
  • Government Gateway user ID and password – if you do not have a user ID, you can create one when you make your claim
  • UK bank details (only provide bank account details where a Bacs payment can be accepted) including the: bank account number, sort code, name on the account, address linked to your bank account. IMPORTANT: You must make the claim yourself. Your tax agent or financial adviser must not claim on your behalf as this will trigger a fraud alert.

Quick questions

  • I took maternity/paternity/adoption leave, is this taken into account?

    Yes. If the leave was taken in 2018/19 and it meant you weren't previously eligible for SEISS, you now can apply. The special HMRC application link is now live and you can find it here. 

    If you took parental leave away from your business and didn't need to submit a self-assessment tax return because your earnings fell below £1,000 – previously you would not have passed the eligibility criteria. However, special dispensation has been announced for new parents who took their leave in 2018/19.

    You might have also earned more than £1,000 from your business, but still failed to be eligible if you had income from other sources (such as a part-time job) which meant your self-employed income was below 50% of your total income.

    This means parents – including mothers, fathers and those who have adopted – who took time out of trading to care for their children within the first 12 months of birth (or adoption placement) will now be able to use their 2017/18, or both their 2016/17 and 2017/18, self-assessment returns as the basis for eligibility.

    IMPORTANT: You can only disregard your 2018/19 trading year if it meant you were ineligible altogether. Unfortunately, if you were eligible, you must still count your 2018/19 tax year when calculating your grant amount, which is based on average trading profits.

  • I receive benefits – can I apply for SEISS?

    Yes, but some benefits could have an impact on your eligibility.

    To qualify for SEISS, your non-trading income has to be less than the trading profits, and some benefits count as "non-trading income".

    Generally speaking, a "taxable benefit" will count as non-trading income, while a "non-taxable benefit" won't count.

    Key benefits that are taxable – and count as income – are:

    • Employment and support allowance
    • Carer's allowance
    • Bereavement allowance

    Key benefits that are non-taxable – and don't count – are:

    • Universal credit
    • Child tax credit

    If you're unsure whether a benefit you get is taxable or non-taxable, click the drop down menus below for the full list.

    • Non-taxable benefits

      These benefits are ignored when you apply for SEISS
      • Attendance allowance
      • Lump sum bereavement payments
      • Bereavement support payment
      • Best start grant
      • Child benefit
      • Child dependency additions paid with carer's allowance, incapacity benefit, state retirement pension and widowed parent's allowance
      • Child tax credit
      • Christmas bonus for pensioners
      • Cold weather payments
      • Council tax reduction
      • Disability living allowance
      • Employment and support allowance (income-related)
      • Funeral support payment
      • Guardian's allowance
      • Health costs, including eye tests, prescriptions and travel under the Hospital Travel Costs Scheme
      • Housing benefit
      • Income support, unless you are on strike when you claim
      • Industrial injuries benefits, including constant attendance allowance, disablement benefit, exceptionally severe disablement allowance and reduced earnings allowance
      • Maternity allowance
      • One-parent benefit, only available if your claim was made before April 1997
      • Pension credit
      • Personal independence payment
      • Return to work credit
      • Severe disablement allowance
      • Social fund payments, including budgeting loans, funeral expenses payments and sure start maternity grants
      • Universal credit
      • War disablement pension, including allowances
      • War widow's/widower's pension
      • Winter fuel payments
      • Young carer grant

    • Taxable benefits

      These benefits are considered "non-trading income" when you apply for SEISS
      • Bereavement allowance
      • Carer's allowance
      • Employment and support allowance – contributory and youth
      • Incapacity benefit – except for the first 28 weeks (higher rate) and those who were receiving the former invalidity benefit at 12 April 1995 for the same incapacity (long-term)
      • Income support paid to people who are on strike
      • Industrial death benefit pensions
      • Jobseeker's allowance – both contribution-based and income-based up to a taxable maximum
      • State pension
      • Widowed mother's allowance
      • Widowed parent's allowance
      • Widow's pension

        Additions for dependent children paid with any of the above benefits are not taxable. An addition for a spouse or civil partner is taxable.

  • I've only recently become a new business and haven't filed a tax return. Can I apply?

    No, unfortunately not. If you weren't able to file a tax return for self-employed earnings in 2018/19, you won't be able to apply. This is to try to prevent fraud – people saying that they have a self-employed business to get the grant.

  • What if my business made a loss?

    The grant you'll get is based on your average monthly profits – so if you made a loss, unfortunately you won't be able to get anything. However, do check what other support is available, including whether you can apply for a business interruption loan or universal credit.

  • What if I have a really good year – do I need to pay the grant back?

    The Government says individuals must "do the right thing" and only make a claim through the scheme if you've genuinely been adversely affected by coronavirus and need financial support.

    However, if you are struggling now and claim the grant, but later in the year your profits increase, the Government has confirmed the grant WON'T be "clawed back" by HMRC.

    It's worth noting that the grants are taxable – so claiming the grant will mean you have a higher taxable income when you come to do your 2020/21 tax return.

  • Is there additional self-employed help if I'm in Scotland?

    Yes. The Scottish Government announced on Wednesday 15 April a further £220 million in grants to help businesses, including the recently self-employed.

    About £100 million of that support is designed for self-employed people and viable micro and SME businesses in distress due to coronavirus.

    There's no additional support in Wales or Northern Ireland on top of the Self-Employment Income Support Scheme.

  • Do I need to prove that I've been affected by coronavirus?

    The latest Government advice says: "You must keep evidence to confirm your business was adversely affected at the time you made your claim". So while you may not need to prove your claim, you should keep as much evidence as you can. 

    HMRC says it only expects people to use the Self-Employment Income Support Scheme if they've indeed been negatively impacted, and is introducing checks to prevent fraud.

  • How does HMRC calculate what my total income is?

    To qualify for the Self-Employment Income Support Scheme, more than 50% of your total taxable income must come from self-employment.

    When looking at what your total income actually is, HMRC takes into account the following: 

    • Income from earnings
    • Trading profits
    • Property income
    • Dividends
    • Savings income
    • Pension income
    • Miscellaneous income

  • I am a landlord but my tenants can't pay rent – can I get help from the scheme?

    Possibly. Being a landlord doesn't preclude you from being a part of the scheme – if you can meet the other criteria. Income from property does count towards your 'total income', but it doesn't count towards trading profits and the scheme looks at trading profits.

    Private landlords are also now eligible for a three-month buy-to-let mortgage payment holiday if their tenants are experiencing financial difficulties.

  • My business has only been mildly affected by coronavirus – can I claim SEISS?

    In short, the answer is yes.

    We get many questions like this, and it's likely a reason why more than 800,000 eligible people haven't claimed the SEISS grant. So to reiterate, if you're eligible and can declare "my business has been affected by coronavirus" (whether due to your/staff illness, less access to premises, reduced demand or something else) then you CAN claim, even if you're still working.

    And the grant is a flat rate, you either get it or you don't.

    Still unsure? We have more detailed guidance on what counts as being adversely affected.

  • I'm an armed forces reservist, can I still get the grant?

    Yes, provided you fulfil the other eligibility criteria. The Government has said that any reservists who currently cannot access the scheme as a direct result of their service in 2018/19 will be able to make a claim for both grants. 

    All of the following must apply:

    • You carried out specified reservist activities for at least 90 days in the period for which your trading profits or total income for the 2018/19 tax year are determined.
    • These reservist activities affected your trading profits or total income for that year.
    • You were self-employed in the 2017/18 tax year and have submitted your self-assessment tax return for that year.

    Specified reservist activities are:

    • Full-time service commitment
    • Additional duties commitment
    • Call-out

    The Government website says that you will be contacted with more information if it thinks you may be eligible.

  • I received the grant but I don't think it was the right amount – what do I do?

    If you think you were underpaid

    If you believe you have not received enough money, there is now an official review process. But first HMRC says you should double-check your calculations using the information on its website, then contact your tax agent adviser if you have one. Then if you still think it's incorrect, you can ask for a review of your claim. HMRC has confirmed there is no specific deadline for people to do this, but it encourages people to do so as soon as possible.

    To do this, you will need to login into your Government Gateway account and have the following information:

    • Your grant claim reference
    • Your national insurance number
    • The unique taxpayer reference you used on your claim
    • Details about why you think the grant amount is too low

    If you think you were overpaid

    If you think you got the grant but were not eligible, or received more than HMRC said you were entitled to, you MUST tell HMRC. You can do this by logging into your Government Gateway account.

    HMRC is not trying to catch people out who genuinely needed to claim – it has assured us that the rule applies in the following cases:

    • You were not adversely affected – we have some helpful examples of what counts in our Adversely Affected guide.
    • You had ceased trading or did not intend to continue trading at the time of the claim.
    • You mistakenly gave HMRC incorrect information that affected its SEISS calculation or eligibility.
    • You knowingly provided false or wrong information to inflate a SEISS claim or make yourself eligible.

    The deadlines depend on the date you received your grant. If you received the grant:

    • Before 22 July 2020, you must tell HMRC on or before 20 October 2020.
    • On or after 22 July 2020, you must tell HMRC within 90 days of receiving the grant.

    You can also tell HMRC if you want to voluntarily pay back some or all of the grant you received. You can do this at any time.

Updated. Grants for businesses in England forced to close due to local lockdowns or struggling due to tier two restrictions

Businesses in England that are required to shut because of local interventions – such as lockdowns or "targeted restrictions" – are now be able to claim up to £1,500 per property every three weeks. This does not affect eligibility for the other forms of Government support, such as the Self-Employed Income Support Scheme. Businesses still closed at a national level, such as nightclubs, are not currently eligible.

How much can I get? 

  • Businesses on premises that pay annual rent or mortgage payments of exactly £51,000 or more can claim £1,500 for every three-week period they are ordered to close.
  • Businesses on premises that pay annual rent or mortgage payments less than £51,000 can claim £1,000 for every three-week period they are ordered to close.
  • Each payment will be made for a three-week lockdown period. Each new three-week lockdown period triggers an additional payment.

How do I get the payment?

  • The grants will be administered by local authorities.
  • As soon as it is confirmed your business will need to be closed for at least three weeks, you need to contact your local authority.
  • It is then up to individual local authorities to make payments as quickly as possible.
  • Not sure how to contact your local authority? Here's the local council website checker.

Local lockdown grant need-to-knows

  • You can't claim for single weeks, ie, £500 for one week. It is either for a full three-week period or none. 
  • The grants are "per property". This means if you have a business with more than one premise, such as a restaurant with two branches that are both forced to close, you will receive two grants. 
  • Further eligibility criteria may be determined by local authorities.
  • As with other Covid-19 business grants, the grants will be treated as taxable income.

Update. The Government's announced it's extending the scheme and will pay up to £3,000 a month to affected businesses

On 9 October 2020, the Government announced it would be increasing the cash grants available to businesses in England which are forced to shut due to local lockdowns. These grants will be worth up to £3,000 per month (payable every two weeks – we assume £1,500 per two weeks), compared with the up to £1,500 every three weeks that was available previously.

The amount your business will get under this scheme extension depends on its 'rateable value':

  • Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month.
  • Medium-sized businesses with a rateable value between £15,001 and £51,000 can claim £2,000 per month.
  • Larger businesses with a rateable value of over £51,000 can claim £3,000 per month.

The Government also said it's extending the scheme to help businesses which have been forced to close on a national rather than a local basis.

We're checking if this replaces the above scheme immediately, or if it comes into effect on 1 November 2020. We'll update this guide when we know more.

New. Grants for businesses struggling due to tier two restrictions

On Thursday 22 October, the Chancellor announced that businesses in England affected by 'tier two' restrictions will get grants of up to £2,100/mth while restrictions apply. The funds will be distributed by local councils and it will be up to them to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business.

In Wales, Scotland or Northern Ireland?

Business support is fully devolved, so it is up to the devolved nations to decide how to support businesses in their areas.

Along with announcing the increase in the level of support for businesses in England, the Government also announced it would be adding an extra £1.3 billion to the 2020/21 guaranteed funding it provides for the devolved administrations in Scotland, Wales and Northern Ireland. It says this will help them devise similar measures, if they wish to.

Scotland

The Scottish Government is to launch its own business lockdown grants – similar to those in England – worth up to £3,000 for businesses forced to close because of local or national lockdowns, and up to £1,500 for firms which are open but impacted by lockdown restrictions.

Wales

Wales will introduce a "fire-break" at 6pm on Friday 23 October and ending on Monday 9 November. It will apply to everyone living in Wales and will replace the local restrictions which are in force in some parts of the country.

The Welsh Government has pledged a package of almost £300 million to support businesses, which will complement wage-support schemes (such as the Job Retention Scheme and the Job Support Scheme) available from the UK Government. It is set to open the week of Monday 26 October and includes:

  • A £1,000 payment for businesses covered by the small business rates relief.
  • A £5,000 one-off payment for small and medium-sized retail, leisure and hospitality businesses, which have to close. 
  • There will also be additional discretionary grants and support for smaller businesses which are struggling.
  • The £80 million fund announced in mid-October to help businesses develop in the longer term, will be increased to £100 million, which includes £20 million ring-fenced for tourism and hospitality.

Northern Ireland

For Northern Ireland, the localised restrictions do not constitute a lockdown, and presently businesses are not required to close under the current measures. There is a range of other business support available.

New. You've now more time to pay July's self-assessment tax payment

The self-employed and others who do self-assessment tax returns had already been given more time to pay 'on account' taxes due, with those struggling to pay their 31 July 2020 'on account' payment able to defer this until 31 January 2021.

Now the Government has said that those who owe tax of less than £30,000 (and more than £32) in January 2021 (so that'd be the deferred July payment and January 2021's 'on account' payment) will be able to use HMRC's 'Enhanced Time to Pay' mechanism to agree a repayment plan to spread that tax bill and repay it by direct debit over up to 12 months. This means you won't need to pay July 2020's 'on account' tax payment in full until the end of January 2022. HMRC has said you need to have no outstanding tax returns, other tax debts or other payment plans set up.

However, you will pay simple interest (meaning it doesn't compound) of 2.6% a year on the Time to Pay plan from 1 February 2021. Plus to set the payment plan up, you'll need to submit your tax return for the 2019/20 financial year – you can do this now, though the deadline isn't until 31 January 2021. Once you've submitted the tax return, you can set up a Time to Pay plan online through your tax account, or you can call HMRC on 0300 200 3822 (open Monday to Friday, 8am to 4pm).

More time to pay VAT too

If your business is VAT registered and you deferred March to June 2020's VAT payment, you will now have the option to spread your payment over the 2021/22 financial year (6 April 2021 to 5 April 2022). You'll need to opt in to the scheme though. The Government says it'll have the opt-in process up and running in early 2021.

What if I'm not eligible for the Self-Employment Income Support Scheme?

Not all self-employed people can get the SEISS grant – for example, if you earn more than £50,000 a year, or if less than half of your income is from self-employment. If you don't meet the eligibility requirements, unfortunately you won't be able to claim, but there are other things you can try:

  • The Government small business bounce back loans can be used to SUPPORT YOUR INCOME, including for those with no other support (eg, newly self-employed, limited company directors). Since Monday 4 May, the new 100% state-backed bounce back loans, for up to £50,000, have been available. They're interest-free and payment-free in the first year – so pay it off then and it's no cost, and at a very low 2.5% annual interest after that.

  • The Government announced that a new 'Pay As You Grow' scheme will give those who've borrowed bounce back loans more flexibility in how they repay, while the time you have to apply for a new bounce back loans has also been extended. For more information, see our Bounce Back Loans guide.

  • Normally we don't cover business finance, but Martin wanted to here, as he'd had an inkling you could effectively turn this into a state support scheme for those who've missed out on the official ones, ie, newly self-employed, self-employed with £50,000+ profits, limited company directors (to an extent) and more.

    We've had it officially CONFIRMED there's nothing in the loan rules stopping you using these loans to support your income (though there can be tax/regulation issues depending on your firm's structure). Of course it's far from ideal – these are loans, not grants – but it's an option. So we've rapidly put together our new Bounce Back Loans guide, outlining how the loans work.
  • Alternatively, you can apply for a business interruption loan. The temporary Coronavirus Business Interruption Loan Scheme is open to self-employed people and offers access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. The Government could also give you a Business Interruption Payment to cover the first 12 months of interest and fees on the loan. 

    The scheme is now open for applications, and is offered by all major banks. Read more on the Government's Business Support website. The two loan schemes will run alongside each other.

  • You can't get statutory sick pay if you're self-employed, but you might be entitled to benefits. But if you have to take time off work because you're sick or self-isolating – or you've lost all your income due to coronavirus – check if you can claim benefits towards housing and other costs.

You may qualify for benefits if you're sick or self-isolating

The various contact tracing schemes in England (Test and Trace), Scotland (Test and Protect), Wales (Test, Trace and Protect) and Northern Ireland (Test and Trace) are all now up and running. If you've been in close contact with someone who tests positive, you may be told to self-isolate for 14 days. If so, and you can't operate your business from home and it's disrupted, you can apply for universal credit, though what (if anything) you get depends on your costs, savings and income.

If you're sick, you can apply for new-style employment support allowance (ESA) and claim from the first day of sickness, but note it's only in cases where households are ill or self-isolating. You won't be able to make a claim because your child's school is closed and you have to take time off to care for them. You can only get help with childcare costs if you're using a registered childcare provider, rather than caring for your kids yourself.

However, it's still worth checking that you're claiming all the other benefits and support you're entitled to, or checking if you can take a mortgage payment holiday or delay energy bills.

IR35 tax reforms have been delayed a year

Controversial reforms which will lead to tax bills going up for many self-employed people have been delayed by a year as a result of coronavirus. Changes to IR35 'off payroll working' rules – anti-tax avoidance rules – will now come in during April 2021 instead.

The changes will mean every medium and large private sector business in the UK will become responsible for setting the tax status of any contracted worker. Currently the rules only apply to the public sector.

In simple terms, this means self-employed people working for a company will pay more tax. The fear is that businesses will find the changes too complicated and use fewer self-employed people as a result. 

However, while the delay comes as a respite for some, it's been made clear the reforms will definitely still go ahead in April 2021.

A message from Martin to those excluded from support...

Martin Lewis, founder of MoneySavingExpert.com, said: "When the Chancellor's financial support schemes first came out, they were rightly lauded for protecting millions of people's jobs and incomes in this unprecedented health and economic catastrophe. At the time, I said in one interview I'd give it an A-grade, but what'd really count is how they'd help those who'd fallen through the cracks.

"Yet whether its new starter furlough or self-employed support, freelance PAYE, limited company directors, dental nurses, shielders whose firms won't furlough and many more – those cracks are now fissures, with up to three million people desperate, without help or support. And so that grade has degraded.

"All my attempts to be allocated a journalistic question at the Downing Street press conferences about this have been turned down, so thank you to Andrew Marr who raised it, in my name, with the Chancellor on the BBC's The Andrew Marr Show.

"Listening to it will not make many hopeful. And indeed if you're in this situation while you can hope for the best, its best to plan for the worst. There's a new group, Excluded UK, set up as a community interest company by three people to try and give a voice to those missing out. It's early days, but at least it means there's a voice being heard, aiming to raise awareness."

Andrew Marr discusses the excluded with Chancellor Rishi Sunak on Sunday 14 June. Content shared at the courtesy of The Andrew Marr Show / BBC.

Embedded YouTube Video

Gig worker, zero hours, freelance or agency? Check what you're entitled to

If you work in the 'gig' economy – for example, you freelance, work through an agency or are on a 'zero-hours' contract – it's important to check what you're entitled to.

The best way to tell this is to see how you're taxed. If you're taxed through PAYE, then you're considered as an employee, so you should have the same rights as an employee. These include being furloughed as part of the furlough scheme – which is closing soon – and being supported by the Job Support Scheme, which begins on 1 November 2020.

If you are self-employed (therefore taxed through self-assessment and not PAYE), you won't be eligible for furlough or the Job Support Scheme, but you may be eligible for the Self-Employment Income Support Scheme grants, or be able to claim benefits.

For more info, see Martin's video below on zero-hours workers.

Embedded YouTube Video

Help for limited company directors whose small firms are struggling

Those who work via small limited companies that they're directors of (as many firms ask them to) have very limited state support available. Yet there is a small amount of wriggle room, which Martin works through in his 10-minute video guide below.

Right now we are checking with the Treasury whether limited company directors can use the new Job Support Scheme on the PAYE element of their income, as they could with the furlough scheme, which ends on Saturday 31 October.

The video includes the following:

  • No official scheme exists for limited company directors. There's no cover for lost dividends, although many are lobbying for it.
  • Limited company directors, even if they're the only employee, can furlough the PAYE element of their income, ie, get 80% of their salary up to £2,500/month. This isn't likely to be huge, as more income is dividends (and there's no help there), but it's something.
  • If you do furlough yourself you can't then work for the firm, but you can continue to perform your statutory obligations as directors, eg, official legal filings (in the video Martin discusses how far this reaches).
  • Furlough can be for as short as three weeks, so there is flexibility if a project's coming through.
  • When furloughed, it seems acceptable that you can work for other people, so you could freelance yourself and work outside of your limited company.
  • Those struggling for income are likely eligible for, and so should also claim, universal credit.

Note: Limited company directors who do PAYE on an annual or monthly basis are eligible for furlough. However, you will need to have made a Real Time Information (RTI) submission (ie, you're on the payroll) on or before 19 March 2020 to be eligible.

Embedded YouTube Video

Martin has also spoken to HMRC chief executive Jim Harra on ITV's The Martin Lewis Money Show, who has given further details on the support available for limited company directors.

Embedded YouTube Video

Limited company directors can use the Government's small business bounce back loans to SUPPORT THEIR INCOME

Since early May, businesses have been able to apply for 100% state-backed bounce back loans, worth up to £50,000 and interest-free and payment-free in the first year – so pay it off then and it's no cost, and at a very low 2.5% annual interest after that. The application deadline for these loans has now been extended to the end of November.

We don't normally cover small business loans, but because these can – in some cases – be used to replace lost personal income, we've been including them in our help guides.

Related Articles

Coronavirus Employment

Free MoneySaving email

Week from 21 October 2020
View more

News homepage

 | RSS feed

Martin's blog

 | RSS feed

Deals Hunter Blog

 | MSE Deals

Tools & Calcs