COVID-19 Advice For Self Employed

Your employer may choose to furlough you, even if you’re a ‘gig worker’ or are currently working under a zero hour contract. Any employee who is on PAYE and has been hired before 28th Feb 2o20 is eligible. Even employees on variable hours can be furloughed. The amount you’ll receive will be 80% of your average salary. Check with your employer who will be able to calculate this for you.

If you are not furloughed but your work is being impacted by the affects of the coronavirus pandemic you may apply for Universal Credit. The amount you could receive depends on your specific circumstances, you can check your eligibility here: Citizens Advice Bureau

As long as you’ve been engaged by your employer since before 28th Feb 2020 you can be furloughed by your employer. You may also be able to apply for Universal Credit.

The government have only offered furlough support to employees or to self employed who pay 20%+ tax, those who pay less tax via dividends have been excluded from support. This has left many self employed and business owners in a difficult position, with other loans and grants unsuitable.

However, the relatively new ‘Bounce-back Loan’ may be suitable for your self employed business, these loans are 100% government-backed and are very easy to apply for. Remember, though, this is a loan – while it is interest free for 12 months you will need to have a plan to pay it back. Find out more on this blog.

Yes, your PSC company may apply for the following loans:

• CBILS loan
• Bounce-back loans

It is unlikely that any of the grants will be applicable to your business.

As a self employed sole trader you can, effectively, furlough yourself and receive an 80% trading profit grant (up to maximum of £2500 per month) from the government between March and May. These grants have been extended in various amounts throughout the pandemic so far, you can find out how to apply here.

Unlike the employee scheme, here you CAN keep working. And you do not need to prove coronavirus impact. However, HMRC says it only expects people to use the SEISS if they’ve been negatively impacted, and is introducing checks to prevent fraud.

If your trading profits are over £50,000, then unfortunately you will not qualify for the Self Employed Income Support Scheme. This may seem unfair, especially if your trading profits are high because you live and operate in an expensive area, like London. We acknowledge that not every self employed individual who has trading profits over £50,000 is wealthy, and this is an upsetting area of oversight by the government.

You may wish to consider the Bounce-back Loan as a temporary stop-gap option.

We understand that the government have chosen to exclude those who are newly self employed because they want to base the support grant amount off an individual’s average annual income. This is unfair and has left many who have been self employed for under one year with no support. The Bouce-back Loans may be an appropriate stop-gap, but this is not ideal because it is still a loan and will need to be repaid.

This is also an issue for those who have significantly increased their self employed income in the last 12 months, who may receive significantly less than 80% of their recent income.

Your business may be eligible for one or more of the following grants:

• £10,000 grant
• £25,000 grant
• Local Restriction Support Grant
• Other grants as provided by local authorities at their own discretion

Your business will be notified by your local council if you are eligible some of these grants, but you may also wish to reach out and discuss your business’ position with your local authority.

You can find out more here.

To furlough yourself you can follow the same process as if you were furloughing an employee. Follow the steps on this blog.

Many self employed individuals who pay minimum salary and maximum dividends will struggle to survive on 80% of their monthly salary, as this will likely amount to less than £1000 per month.

The only other avenue you could consider is to apply for a Bounce-back Loan to help you manage as a stop-gap until you can continue working as usual.