Six alternative options for people that can’t claim government self-employed income support
The UK government has done a great job in trying to help self-employed people during the current pandemic. Even then, some of their current schemes just haven’t been broad enough to account for the diverse range of self-employed people, leaving many without the help during this time.
If you’re one of the unfortunate people that feels like they’ve been forgotten, there may be other ways to support yourself during this time.
We’ve put together a list of 6 other options that are worth considering:
1. Deter your Self Assessment Income Tax
If you are registered for self assessment in the UK and are struggling to pay your second tax payment due 31 July 2020, you can choose to defer it to 31 January 2021.
You don’t need to inform HMRC as they’ve announced there will be no penalties or interest charged for this.
Once you’ve got enough cash to pay off your tax bill you can simply make the payment any time between 31 July 2020 and 31 January 2021.
If you’re still struggling to pay off your tax after 31 January 2021 you can get in touch with HMRC’s Time to Pay Service to talk through other options.
2. Defer your VAT Payments
All UK registered businesses have the option to defer their VAT payments that were due between 20 March 2020 and 30 June 2020.
Once again, there are no penalties or interest charged if you choose to do this, however the deferred VAT must be paid on or before 31 March 2021.
3. Universal Credit
Universal credit is available to anyone in the UK that has taken a hit to their income and needs help covering their living expenses.
You must be ‘gainfully self-employed’ to be able to claim Universal Credit support. This means you’ll have to show (among other things) that:
- Self-employment is your main job or source of income. You can do this by sharing your tax returns, your Unique Taxpayer Reference, business plan, customer lists, or marketing materials etc.
- You get regular work from self-employment
- Your work is organised – this means that you have invoices and keep a regular record of receipts and your accounts
- You expect to make a profit while being self-employed
Universal Credit include a Minimum Income Floor (MIF), which is an assumed level of earnings to calculate your Universal Credit award. However, this minimum floor has been relaxed for anyone looking to make a claim during the outbreak.
4. Bounce Back Loan Scheme (BBLS)
The BBLS is a new financial support scheme that allows businesses across the UK to borrow money if they’ve lost revenue or have less cash available due to the pandemic. BBLS is available through a range of British Business Bank accredited lenders and partners including the likes of Barclay’s, NatWest, Santander, RBS and more.
The scheme helps small and medium businesses to borrow anywhere from £2,000 up to 25% of their total revenue with a cap at £50,000.
Key features of the BBLS include:
- You don’t have to pay back any of the loan for the first 12 months
- The interest paid on the loan is set at 2.5%
- You can borrow the money for up to a maximum of 6 years
- There are no early repayment fees if you choose to pay back the loan early as your business recovers
5. Coronavirus Business Interruption Loan Scheme (CBILS)
If you run a small to medium sized business that makes less than £45 million a year in revenue, and have been negatively impacted by the pandemic, you could apply for the CBILS. The government has even increased the number of eligible businesses to help those that originally fell outside the CBILS eligibility.
The loan is offered by over 40 lenders across the UK. You could borrow anywhere between £50,000 and £5 million as a loan, overdraft or even to help finance your invoices.
The key details are:
- Borrow anywhere between £50,000 and £5 million in the form of a loan
- Have up to 6 years to pay the money back if it’s a loan or up to 3 years if it’s used as an overdraft or to finance your invoices
- The first 12 months are interest free
- You can defer making debt repayments for between 6 and 12 months if you need to (capital repayment holiday)
- No need to personally guarantee any debt under £250,000 so you don’t put your personal situation at risk
- For loans over £250,000 you only need to provide a personal guarantee up to 20% of the amount borrowed (The government guarantees the other 80%)
You can check out the British Business Bank website for more details.
6. Job Retention Scheme
The UK Chancellor, Rishi Sunak, has provided further detail on the Job Retention Scheme which is planned to be wound down by October 2020.
Flexible furlough starting 1 July 2020 employers will be able to bring back ‘furloughed’ workers part-time
From 1 July 2020 employers will be able to welcome back furloughed workers on a part-time or reduced hours basis. They may do so while continuing to claim support from the UK job retention scheme for the hours the employee is not working. Employers can claim 80 per cent of the employee’s wage cost through the furlough scheme for the days the employee is not working.
For example, if an employee is brought back for 3 days a week, the employer will pay wages for these 3 days in full, while continuing to claim 80 per cent of the employee’s wage cost through the furlough scheme for the other 2 days where the employee is not working.
How does the government support scheme taper down?
Thanks to the scheme taper down, the employer will not have to contribute till August. Here is how the scheme will work:
June and July: Under the furlough scheme, the UK government will pay 80% of furloughed employee wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
August: The government will pay 80% of wages up to a cap of £2,500 however National Insurance and Pension contributions are to be made by the employer.
September: The government will pay 70% of wages while the employer will contribute 10% of the wages to make up the 80% total, subject to a cap of £2,500. The employer will also pay National Insurance and Pension contributions.
October: The government will pay 60% of wages while the employer will contribute 20% of the wages to make up the 80% total subject to a cap of £2,500. The employer will continue to pay National Insurance and Pension contributions.
Even though the Flexible Furlough Scheme will be introduced as a new scheme, it will be only available for organizations that have furloughed the staff before 10 June 2020. The current system will end on 30 June 2020 and therefore from 10 June 2020 to 30 June 2020, the government will give the organizations the three week mandatory period in the current scheme before it ends.
You can read about the Self-Employed Income Support Scheme (SEISS) also on our blog here.
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