Government Support For the Self-Employed During Coronavirus

Government support for the self-employed and changes to the benefits system, including a new style taxable income support grant, have been put in place to help us financially as we navigate the near-impossible hand that Coronavirus has dealt us.

Updated 25 January 2021.

Here is a summary of the benefits you may be eligible for if you need income support over the coming months, according to your situation. What you are entitled will depend on whether you are registered as self-employed, how you pay yourself and whether you have contracted Covid-19.

Tax Return Deadline Extension

The tax return deadline, normally 31 January each year, has been extended to 28 February 2021 for this year only. The tax return deadline extension has been made in response to the number of people struggling to file their tax return in these unprecedented times.

Individuals who manage to file their returns by 28 February will avoid the £100 penalty, but they must pay any tax they owe by 31 January as normal and interest will be applied on any unpaid tax from 1 February. If you are unable to pay your tax, you’ll need to file your tax return before you can apply for a time to pay arrangement to spread your tax bill over 12 months.

Self-Employed Income Support Scheme (SEISS)

SEISS was set up by the Chancellor to try and compensate self-employed workers who have lost income as a result of isolation and lockdown measures, similar to the furlough scheme for employed workers.

It takes the form of four taxable grants (each covering a 3 month period) of 80% of profits to a maximum of £7,500 each, paid to individuals registered as self-employed with business profits of less than £50,000 and tax returns submitted for 2018/2019.

Payment on Account Deferral

When you’re self-employed you normally need to make an advance payment towards your following years tax bill on 31 January and 31 July each month. With recent events, and to aid the cash flow of the self-employed, a decision has been made to defer the payment on account due on 31 July 2020. You’ll now just need to pay it with your tax bill in January 2021 rather than in advance.

Employment & Support Allowance (ESA)

ESA is a type of sick-pay originally aimed at helping people who cannot work due to an illness or disability. But the government have confirmed that they will extend ESA to give financial support to the self-employed during the Coronavirus crisis to help those that are sick and cannot claim sick pay like someone who is employed would do.

That means if you are a sole trader and forced to take time off work because you are self-isolating, you could be eligible for employment & support allowance.

Universal Credit (UC)

Universal Credit starting at £342.72 per month is available if your income takes a dip, like during the coronavirus pandemic. Normally when you’re self-employed, you’ll need to commit to earning a certain amount of income yourself each month which is known as the Minimum Income Floor, however, this has now been scrapped.

Bounce Back Loan Scheme (BBLS)

The bounce back loan scheme launched on 4 May 2020 to help small and micro businesses who have been adversely affected by Covid-19. UK based businesses can apply for a loan of up to £50,000 using a simple one-page form through most British Banks. And although it is a repayable loan, it is 100% government-backed, interest-free for 12 months with no repayments for 12 months also.

Business Interruption Loan (CBILS)

The business interruption loan is geared at larger business, rather than the self-employed, offering larger loans of between £50,000 to £5m. The loans are being made by major banks and are 80% government-backed, to give lenders confidence that they will get repaid. In addition, the government will also make a one-off payment to cover the first 12 months of interest payments, to help reduce the cost and initial repayments.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.