by constructaquote - 3 August 2020
Applications for the second grant under the Self –Employment Income Support Scheme (SEISS) open on 17th August and are available to self-employed individuals whose businesses have been adversely affected by coronavirus. Although you do not need to prove the impact of coronavirus, you will need to declare that you were impacted between March and May, and the HMRC are introducing checks on this to prevent fraud.
The grant is based on your profits over three years, and is calculated from your tax returns between 2016 & 2019. If you are eligible for the grant, you can expect to receive up to 70% of your trading profits, capped at £2,190 a month and as it is a grant you are not expected to repay the money.
You can apply for the support whether or not you received the first grant but there are some conditions to this. You must earn more than 50% of your total income from self-employment and your average trading profit must be less than £50,000 per year. Grants are based on your profits over three tax years, and you must have filed a tax return for 2018/2019.
The implications of these pre-conditions have contributed to some 3 million self-employed and small business owners being unable to access the grant. If you are one of those who are unable to claim SEISS then do not fear, there are other options available to you.
The Bounce Back Loan Scheme allows applicants to borrow between £2000 and £50,000, capped at 25% of your total turnover. This is calculated from your 2019 turnover or estimated if you are a new business.
You will not expected to make repayments or charged interest in the first 12 months, and thereafter interest will be charged at 2.5%. The loans are set for up to six years, and there is no penalty to repay the loan early. Your personal or business credit rating will not affect your eligibility, however it is likely to show on your business credit report. There are currently 14 lenders offering the loan.
Bounce Back Loans can be used to repay existing finance and whilst it is not ideal, the Treasury has confirmed it can be used to support your income. So although you will have to repay the loan, it can be used as a short term solution.
Alternatively, the Business Interruption Loan is available to self-employed individuals and offers access to loans, overdrafts and finance & asset finance of up to £5 million over 3-6 years. Over 50 lenders are participating in the scheme and you can apply directly via their website.
You could also consider whether deferring your income tax payments will help with cash flow in the short term, although of course these payments will need to be paid along with your normal January 2021 payments. In addition to this, if you know that your annual income is much going to be much lower than the previous year as a result of coronavirus, you can ask to reduce this payment on account – but do seek independent advice on this as interest may become payable if you reduce it too much. A final point to cover on tax is that the controversial changes to the IR35 rules have been delayed and now do not come into force until April 2021.
A not for profit organisation has been set up to offer advice and guidance to those who are unable to access the government support schemes, and you can visit the ExcludedUK website here.
by Charlotte Houghton - 7 October 2020
by constructaquote - 6 October 2020
by Charlotte Houghton - 29 September 2020
by Charlotte Houghton - 24 September 2020
