During the Coronavirus epidemic, the UK Government has offered support for small and medium-sized businesses, and the self-employed.
Freelancers (self-employed individuals) with trading profits of up to £50k can apply for a taxable grant worth 80% of their average monthly profits, up to £2,500 a month.
HMRC will take your average profits from the last 3 years of tax returns ie: 2016/17, 2017/18 and 2018/19, deduct tax, work out 80% and that’s what you’ll receive.
- 1 What support is available for freelancers during the Coronavirus crisis?
- 2 Who is eligible for Self-Employed Income Support?
- 3 When will support for freelancers be available?
- 4 What support is available for for freelancers with limited companies?
- 5 How is coronavirus affecting freelancers and small businesses?
The Self-Employed Income Support Scheme will provide many freelancers with much needed financial relief.
In summary: Freelancers (self-employed individuals) with trading profits of up to £50k can apply for a taxable grant worth 80% of their average monthly profits, up to £2,500 a month.
More details on the Self-Employed Income Support Scheme:
- Measures expected to support 95% of self-employed people (also partnerships)
- A new self-employed taxable grant of up to 80% of trading profits up to a maximum of £2,500 per month for at least three months
- You’ll be able to claim these grants and continue to do business
- Trading profits to be averaged over up to last three years
- The scheme will be open for at least three months
- HMRC will contact eligible businesses
Who is eligible for Self-Employed Income Support?
HMRC have said that to be eligible for the scheme you must meet all the criteria below:
- Be self-employed or a member of partnership;
- Have lost trading/partnership trading profits due to COVID-19;
- File a tax return for the 2018/19 tax year as self-employed or a member of a trading partnership. Those who have not yet filed for 2018/19 will have an additional 4 weeks from 27th March 2020 to do so;
- Have traded in the 2019/20 tax year; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020/21
- Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
- Your trading profits and total income in the 2018/19 tax year
- Your average trading profits and total income across up to the three years between 2016/17, 2017/18, and 2018/19
However, an estimated 2 million self-employed will not be eligible and that’s not good enough. We are going to pressure Government to do more and look at ways we can help those who cannot gain access to the grant.
When will support for freelancers be available?
The scheme should be set up and making payments by early June 2020.
HMRC will make payments directly into bank accounts. This is expected to be a lump sum payment covering the three applicable months.
What support is available for for freelancers with limited companies?
The Chancellor announced a VAT payments deferral on 20 March to support businesses with cash flow during the COVID-19 pandemic.
This means that all businesses with a UK VAT registration have the option to defer VAT payments due between 20 March and 30 June.
You therefore have until 31 March 2021 to pay any VAT deferred as a result of this announcement.
You do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return.
Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to pay repayment claims as normal. You must continue to submit VAT returns as normal.
There are more details on the scheme on the government’s Business Support website.
We’d love to hear from you to see how Coronavirus is affecting your freelance business and what support we can offer.
Leave a comment below with any questions or details of support you need.