Five-million people in the UK are currently wondering how they're going to cope financially with the coronavirus outbreak. These people are the self-employed, who have often come from nothing to build their businesses, and who today make up around £300 billion of the UK economy. 
There are many freelancers and self-employed who aren't able to benefit from any of the grants that the government is offering, because they do not have business premises. They most likely cannot furlough themselves as limited company directors on a payroll. Their businesses don't qualify for business interruption loans. They can't apply for universal credit because their partner has an income - but it still isn't enough to keep the household running. If they do qualify for universal credit, they'll receive just under £400 a month. 
 
They feel as though they've been left in the dark. 
 
There are many self-employed people who are able to continue working during the outbreak, but it doesn't come without complications. Many online business owners who work from home full time may not directly affected by the coronavirus pandemic, but they often have clients whose work has drastically dried up. 
 
There are still construction workers heading into work everyday because they won't get paid otherwise. On LBC radio yesterday, one anonymous caller who works on a building site admitted that he had still been going into work everyday, despite showing symptoms of coronavirus. He felt as though he didn't have a choice - if he doesn't work, he doesn't get paid, and his family cannot eat or stay warm. 
 
The Chief Secretary of the Treasury, Steve Barclay MP, has said that the government knows many self-employed people are experiencing real panic at the moment, but that the government is working urgently to address this problem. He said "I say to the self-employed, we have not forgotten you, help is coming." 
 
Today, we finally learnt how the self-employed will be helped during the COVID-19 outbreak. Here are the details... 
Under the new Self-Employed Income Support scheme, the government will pay self-employed people a taxable grant of up to 80% of their average income over the past three years, up to £2,500 a month. This is similar to the Coronavirus Job Retention scheme for furloughed employees. Self-employed people will be able to claim these grants and continue to work in their business, which differs quite significantly from the furloughed employees who will benefit from the CJRS, as they are not permitted to work while they benefit from the scheme. 
 
In steps to make the scheme "deliverable and fair", it will be open to anyone with trading profits of up to £50,000 who predominantly works as as self-employed person. You also will be required to have done a tax return for 2018/2019. 
 
Access to the scheme is expected to be no later than the beginning of June 2020 and a lump sum payment will be paid for the time between now and then. HMRC will be in touch if this applies to you, therefore you do not have to do anything. 
Sunak advised that the new scheme will help 95% of the self-employed community. It will not cover the remaining 5% of the self-employed community however Sunak pointed out that these peoples' incomes are around £200,000 and for that reason he called the scheme "generous" and "fair". 
 
There will be self-employed people who entered the self-employed workforce less than three years ago, and Sunak stated that HMRC will look at whatever accounts are available. Unfortunately, for those who have very recently entered the workforce and don't have one years' worth of accounts yet, they will not be able to benefit from the scheme, but will be able to potentially access a grant if they have business premises, a business interruption loan or universal credit. 
 
The chancellor also advised that for those who missed the tax return deadline in January but want to access the Self-Employed Income Support scheme, they have four weeks from today to file their returns. 

There are a few things we still don't know... 

Does it support company directors who earn a salary and dividends? 
Unfortunately, those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. More details of this here
 
Is the £50k profit cap per year, or average over 3 years? 
The cap refers to self-employed people with annual profits of up to £50,000. 
 
How will the self-employed manage until June? And can the Universal Credit system cope? 
We are also concerned that the fact that we have to wait until June will put pressure on many self-employed people who live month-to-month on their earnings. Answer is, I wish I knew! There are loans available and short-term lending may be the key option to weather the storm. 
 
So why has it taken so long for the government to release details of the financial help for the self-employed? In the government's defence, the self-employed are more complex than employees. Many self-employed people earn a combination of salary and dividends - so it isn't neccessarily as simple as 'work out your income and the government will pay 80% of it' like we've seen with the Coronavirus Job Retention scheme for employees. 
 
There's no doubt that it's been an even more uncertain and tumultuous time for the self-employed over the past few weeks and the past week especially, but we are glad that there is finally some level of financial support available. We expect full details to be released over the next few days, and we will update out Coronavirus Support Hub updated as soon as we hear anything. 
 
Check out our dedicated Coronavirus Support Hub here - it's full of 100% free resources which are constantly being updated. 
 

Need urgent advice or support? Book a call with Nicola or try the new government helplines 

We understand how scary and uncertain this time is for you, so we are here if you need to speak to us. If you need urgent financial advice, please do not hesitate to book a call here
 
Alternatively, a new HMRC helpline has been launched to help businesses concerned about paying their taxes due to coronavirus. Some options are agreeing an instalment arrangement, suspending debt collection proceedings and cancelling penalties and interest where you run into administrative difficulties contacting HMRC or paying them directly. If you run a business or are self-employed and are concerned about paying your tax due to coronavirus, you can call HMRC’s helpline for help and advice on 0800 0159 559 and the helpline is open Monday to Friday 08:00-20:00 and Saturday 08:00-16:00. There are likely to be call queues and delays – so patience is a virtue! 
 
There is also a new Business Support Helpline for free advice from the government, which you can see the full details of here
 
 
 
 
Written by 
 
Nicola J Sorrell - 
Effective Accounting 
 
Founder | Xero Champion | IR35 Expert 
Tagged as: Coronavirus
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