COVID-19: The Financial Support Guide

Hands up if you've felt one of the following the past few weeks:

1 - scared
2 - confused, or
3 - very very frustrated?

Same here 🙋‍♀️. The lack of clarity on what you are and aren't entitled to has left thousands in the dark.

And while everyone's situation is different, it still helps to try and demystify the whole coronavirus financial support shebang, so here goes.

FREELANCE

By 'freelance’ we mean sole trader (if you pay your own taxes via HMRC, you'll hopefully know whether you're registered a sole trader).

👉The Self-employment Income Support Scheme (SEISS) was set up to (finally) help out self-employed people whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals worth 80% of their profits, of up to £2,500 per month. Please note that if you are set up as a limited company, you are not eligible for this scheme. If you’ve become self-employed since April 2019, you are also unfortunately not be eligible, and might want to consider Universal Credit.

HMRC will use your average profits from your tax returns in the last three years to calculate how much you will get.

Wondering if you are eligible? To qualify for SEISS, you must:

1 - be self-employed and have lost profits due to the coronavirus (although there is no 'official test’ for this that we know of).

2 - have filed a tax return for 2018-19

3 - have traded (which is a fancy word meaning 'selling your goods or services’) in 2019-20; be trading at the point of application (or would be trading if it wasn't for the pain of the 'rona) and intend to continue to trade in 2020 to 2021

4 - have profits of less than £50,000 and more than half of your total income must come from self-employment.

How can you claim? HMRC will contact you if they think you are eligible and invite you to apply online. But be patient - it hasn't been rolled out yet! If you qualify, HMRC will pay the grant directly to your bank account. Grants are expected to start to be paid by early June 2020.

👉Universal Credit: You can also apply for Universal Credit, albeit the maximum you can receive is £94 per week. Universal Credit is a notoriously tricky system and you'll have to jump through quite a few hoops, so make sure you apply ASAP. Use this Benefit Calculator to find out if/how much you qualify for. Note that you have to have the right to receive public funds in order to qualify (this means non-UK/EU citizens aren't eligible).

It’s also important to note that you have the option to defer your income tax payments. If you have income tax payments due in July 2020 under the self-assessment system, you can defer them until January 2021.

SMALL BUSINESS OWNER

If you run your own business, these are your options:

👉Small Business Grant Funding of £10,000 for all businesses that receive small business rate relief or rural rate relief. If eligible, you'll get a one-off grant of £10,000. You don't need to do anything to apply - your local authority should be in touch.

👉The Coronavirus Business Interruption Loan Scheme if your business has a turnover of no more than £45 million per year, with more than 50% generated from trading activity, you can apply for this loan. There are different options available, including term loans, overdrafts, asset finance, and invoice finance. The first 12 months of the loan will be interest-free (with the costs covered by the government). The government provides a guarantee to the bank for 80% of your loan, but you will remain liable for 100% of the outstanding debt. The scheme is open for applications. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank).  Lending decisions will still be down to the bank, though.

👉Coronavirus Statutory Sick Pay (SSP) is a refund scheme designed for small and medium-sized businesses with up to 250 employees as of 28 February 2020. This refund will cover up to 2 weeks' SSP per employee who has been off work because of coronavirus.

👉Self-employed limited company directors can be furloughed (effectively 'put on hold' as employees on their PAYE element), even if they’re the sole employee. So, in effect, you can still get 80% of salary up to £2,500 per month.

Other financial support includes:

A VAT holiday – no business will be required to pay VAT until mid-June. Do note, however, that all businesses will be required to pay those bills by the end of the financial year (March 2021).

The HMRC Time To Pay Scheme – small and medium-sized businesses who cannot afford to pay their tax bills can ask HMRC for a Time to Pay agreement to suspend debt collections. This will be available for all businesses and self-employed people who are struggling with their finances. These cases will be assessed on a case by case basis by HMRC.

EMPLOYEE

If you work for a company, chances are you've been told to work from home and will continue to get paid in full. If that's the case - yay, you don't need to do anything (besides trying to stay sane). If, however, the business you work for is negatively affected by the coronavirus and it's likely that you simply can't work - read on.

👉The Coronavirus Job Retention Scheme allows employers to put staff who can't work on 'furlough' – aka, on hold – and the government will help cover 80% of their salary (you've guessed it - up to £2,500 per month). Essentially, being on furlough means you'll be on 'sleep mode’ until your business is able to pick up the pieces when the crisis abates. Once all this is over, you'll resume work as normal.

Your employer will decide who gets furloughed. It could be because you've simply got no work to do. But you can also be furloughed if, for example, you have to look after your children. Employees must be consulted and agree to be furloughed as it is a change to the terms and conditions of their employment. You’ll also still need to pay tax and NI contributions on this wage. Keep in mind that while you’re on furlough, you’ll still have the same rights as you did when you were employed – eg. maternity pay or statutory sick pay.

NB: to qualify, you need to have been on your employer’s payroll on or before 28 February 2020. If you've recently changed jobs, you can get in touch with your ex-employer and see if they can re-hire you to furlough you (yep, it's been done). And, while the government are not encouraging people to take on any temp work while they're on furlough, there's technically nothing stopping you - so as long as you speak to your employer and get the ‘okay'.

This info is valid as of 1/4/2020, so make sure you check the latest info here from the gov.uk website: COVID-19: guidance for employees, employers and businesses