As the outbreak of coronavirus continues, there is much uncertainty and speculation on how it will impact the economy. To help provide stability during this time, we have set up this FAQ page, which will be continually updated to support and guide you.
The good news is that there is support for individuals and the self-employed and the government is investing huge amounts to limit the impact.
- What support is available for the self-employed?
- Self-employed Income Support Scheme - First grant
- Self-employed Income Support Scheme - Second grant
- Self-employed Income Support Scheme - Fourth grant
- Self-employment Income Support Scheme grant extended
- Deferring Income Tax Payments
- Business Interruption Loan
- Employment and Support Allowance (ESA)
- Universal Credit (UC)
- IR35 delays
- What support is available to individuals and employees?
- Further support
- Landlords and tenants - what are my rights?
- What are the tax implications for non-UK residents forced to overstay?
Self-employment income support scheme - First grant
The scheme allows self-employed people affected by coronavirus to apply for a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month. The scheme is now closed, but you may be able to claim the extended grant.
- Open to people across the UK for three months, paid in a single instalment.
- The support will be targeted and only open to those with trading profits up to £50,000.
- Only open to those that earn at least half of their income from self-employment.
- To minimise fraud, grants will only be available to those already in self-employment and traded in the tax year 2018 to 2019 and have submitted their tax return on or before 23 April 2020 for that year.
Self-employment income support scheme - Second grant
Subject to eligibility criteria as above, the self-employed can apply for a second grant from the government. The taxable grant will cover 70% of their average monthly profits (calculated using their earnings from the last three years) for three months, capped at £6,570.
Applications for this grant are now closed.
The Chancellor has announced the fourth round of support for self-employed businesses affected financially by COVID-19 covering the period 1 February 2021 to 30 April 2021.
Here is the eligibility criteria for the fourth grant:
- You must have traded in the tax year 2019/20 and submitted your tax return on or before 2 March 2021.
- Also, you traded in the tax year 2020/21 and intend to continue trading.
- The self-employed trading profits must be up to a threshold of £50,000 and these profits constitute more than half of your total taxable income for the 2019/20 tax year or the average trading profits for the 2016/17, 2017/18, 2018/19 and 2019/20 tax years constitute more than half of your total taxable income.
- Are currently trading but are impacted by reduced activity, capacity or demand due to coronavirus, or have been trading but are temporarily unable to carry out your business due to coronavirus
- You reasonably believe you will suffer a significant reduction in trading profits due to the reduced business activity, capacity or demand, or inability to trade during the period 1 February 2021 to 30 April 2021 due to coronavirus.
The taxable grant is worth 80% of your average 3 month’s trading profits and capped at £7,500 in total, which HMRC will pay in a single instalment directly into your bank account.
The deadline to make the claim is 1 June 2021. Find out more here.
Self-employment income support scheme grant extended
The Government is extending the SEISS grant, which will be available to those who are eligible for SEISS and are continuing to actively trade, but are facing reduced demand because of the coronavirus.
The SEISS will be extended to September 2021. A fourth SEISS grant will run from 1 February to 30 April, worth 80% of three months’ average profits (capped at £7,500).
A fifth grant will then be available, claimable from late July, which will cover the period May to September. It will be worth 80% of three months’ average profits where the claimant’s turnover has dropped by 30% or more.
Eligibility for both grants will be extended to include those who were self-employed in 2019/20 and who have filed a tax return for that year.
The fourth grant will be available from late April 2021. Find out more here.
Deferring Income Tax payments
Income Tax Self-Assessment payments due on 31.7.2020, have been deferred to January 2021.
- Eligibility - all taxpayers, not just those self-employed.
- To access the scheme - This is an automatic scheme; no application is required.
Employment and Support Allowance (ESA)
Changes have been made to support those who are self-employed and cannot work due to the coronavirus. These people can now claim ESA from day one of their sickness period. More details can be found here.
Universal Credit (UC)
The government has changed the welfare system so self-employed people can access universal credit in full (a self-employed person with a non-working partner and two children, living in the social rental sector can receive welfare support up to £1,800 per month).
The government has also confirmed that people who can’t work their normal hours because of coronavirus will still receive their usual tax credits payments until the Job Retention Scheme and Self-Employment Income Support Scheme close.
The government has announced that the IR35 tax reform will be delayed until 6 April 2021. The changes have not been cancelled, but at least this gives some respite and will prevent further disruption to the contractor market. More on this can be read here.
- Sick Pay. Employees too ill to work because of COVID-19 can claim Statutory Sick Pay from day one of their sickness, rather than day four. Employees do not need to provide a 'fit note' but can get an 'isolation note' from NHS111. Speak to your employer should you have any concerns.
- Furloughed Employees. If your employer cannot keep you on because of COVID-19, to avoid redundancies, your employer will be able to access the Coronavirus Job Retention Scheme. If your employer wishes to do this, they will speak to you and you will be classified as a furloughed worker. To qualify, you will not be able to undertake any work for them but will continue to be paid 80% of your salary, up to £2,500 per month whilst you are on this period of leave.
- Universal Credit (UC). Whether you are in or out of work, if you are on a low income and affected by COVID-19, you will be able to access the full range of the welfare system, including UC.
- Hardship fund - The fund which amounts to £500 million will be given to local authorities to support vulnerable people. We are waiting to see how this will be used and claimed. However, it is expected that it will come in the form of Council Tax Relief.
- Mortgage holiday - Mortgage borrowers (residential and buy-to-let) can apply for a three-month mortgage holiday from their lenders. It is important to note, however, that this is just a holiday and not a grant, the amount will still need to be paid in the future and interest will be added.
- Tenants can also apply for a three-month holiday from their landlords.
- New emergency measures with the energy industry to protect the domestic energy supply of those most in need. From 19 March 2020, customers with pre-payment meters who may not be able to add credit can speak to their supplier about options to keep them supplied. Read more here.
One of the key impacts of the COVID-19 pandemic has been the disruption to travel, which has stranded individuals in the UK and put them at risk of losing their non-residence status.
The UK uses the Statutory Residence Test (SRT) to determine whether an individual is resident in the UK for tax purposes in any given tax year. The key component of the test is the counting of the number of days during which an individual is present in the UK.
UK rules grant an exclusion from an individual’s day count for days relating to exceptional circumstances. The number of days one can disregard due to exceptional circumstances is restricted to 60 days in any tax year. The tax authorities have recently updated their guidelines, allowing individuals that are unable to leave the UK or enter into their country of residence because of COVID-19, the ability to apply for special treatment under the exceptional circumstances regulations.
The overriding concern here is whether the 60-day limit on disregarded days is sufficient should things continue for the foreseeable future. We will therefore have to wait and see if any further amendments are made.
Read more here: COVID 19: Impact on UK tax residency.
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