The coronavirus epidemic is hitting all businesses hard, but the self-employed are understandably feeling vulnerable and exposed at the moment. We want you to know you're not alone. We're here for you.

In this section we endeavour to keep you updated with guidance as it's issued and practical steps you can take for your business.

Guidance and practical steps:

Self-employment Income Support Scheme

Chancellor Rishi Sunak announced on 26 March the Self-employment Income Support Scheme, a much-anticipated and very welcome lifeline of support, of which 95% of self-employed people will be able to benefit. 

What does the package look like for the self-employed?
  • Taxable grant worth 80% of their average monthly trading profits over the last three years up to £2,500 per month
  • Open across the UK for at least three months and extended if necessary
  • Can claim these grants and continue to do business
Are there any restrictions?

It is recognised that this has been difficult to do in practice, with a very diverse self-employed demographic. There are some initial guidelines:

  • Not open to anyone with trading profits over £50,000
  • Only available to people who make the majority of their income from self-employment
  • You must be trading at the point of application (or would be, except for coronavirus) and intend to continue to trade in the tax year 2020 to 2021
Are your trading profits less than £50,000?

In determining if trading profits are less than £50,000, one of the following conditions must be met:

  • Have trading profits/partnership trading profits in 2018/19 of less than £50,000 and these profits make up more than half of your total taxable income
  • Have average trading profits in 2016/17, 2017/18 and 2018/19 of less than £50,000 and these profits make up more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

How do I access this scheme?

Access to funds is estimated to be from the beginning of June, although this may come sooner. HMRC will contact you directly and ask for a simple online form to be completed. The scheme will be backdated to cover the three months income up to May 2020 and the money will be paid straight into your bank account.

Anyone who missed the 5 April 2019 tax return filing deadline in January must submit their tax return before 23 April 2020 to ensure they are eligible.

Find out more on the Government’s website.

Support for the Fishing sector

On Wednesday 25 March the Scottish Government announced an initial support package of £5 million for the fishing and seafood industry. This will include onshore processing firms.

Owners of vessels under 12 metres in length will receive an initial payment of 50% of two months average earnings administered by Marine Scotland. As many fishermen in this sector have lost their livelihoods almost overnight this is a positive and much needed boost.

We await to hear if similar support will be announced for the rest of the fleet as they battle against the fallout from the coronavirus crisis.

On Friday 3 April, financial support was also announced for seafood processors. The support will be available through a £10 million Scottish Government scheme. The Scottish Seafood Business Resilience Fund will provide a combination of grants and loans to businesses suffering severe hardship following the shutdown of international markets and the domestic food service industry. 

Coronavirus Job Retention Scheme

The UK Government will pay wages through the Coronavirus Job Retention Scheme – every employer in the country will be eligible to participate in the scheme. Companies are advised to contact HMRC and apply for a grant to cover the wages for people who are in furlough (those who have been sent home from work due to the coronavirus outbreak as long as they are not undertaking any work and will be brought back into work). The amount available is 80% of an employee’s salary up to a maximum of £2,500 per month, per employee. It can also be backdated to March 1 and will be open initially for three months. HMRC are working hard to get this up and running. It is thought that the first grants will be paid in the coming weeks and fully set up by the end of April. 

We've created an initial briefing note on this scheme based on the information available at the moment. Visit our Coronavirus Job Retention Scheme page for more details.

Bridging loan scheme

Further to the Bridging Loan announcements earlier this week, the Government are reviewing an extension of the scheme to include larger and medium-sized businesses. We expect further announcements on the details next week.

Coronavirus Business Interruption Loan Scheme (CBILS)

This will now be interest free for 12 months, instead of the six months as previously announced. This will now be interest free for 12 months, instead of the six months as previously announced. Loans are available now. The Chancellor announced key updates to the scheme to make it more accessible for all businesses including on 3 April. Read our latest blog for the more detail here.

Next quarterly VAT payment deferred

The next quarterly VAT payment due by businesses is to be deferred. Payments are deferred from now until end of June and companies will have until the end of the financial year to pay any deferred VAT. This is a direct injection of £30 bn of cash to employers, equivalent to 1.5% of GDP.

Key points to note:
  • VAT returns are still required to be prepared and filed by the normal due date.
  • The deferment is applied automatically, there is no requirement for businesses to apply to HMRC.
  • If VAT is normally paid by direct debit, a business will need to cancel the direct debit with their bank to ensure a VAT payment is not collected.
  • Similarly, payments on account (if applicable) for VAT would need to be cancelled to ensure that payments are not collected.
  • This is simply a deferment and the amount of VAT deferred will still be payable to HMRC at a future date. Payment will be due by 31 March 2021 and further guidance is expected from HMRC soon as to how businesses can repay the VAT deferred.
  • HMRC will not charge interest or penalties on any amount deferred.
  • The deferment is optional and businesses who are in a position to pay their VAT liability as normal can choose to do so.
  • VAT payments due following the end of the deferral period need to be paid as normal.
  • It is not absolutely clear if the deferral applies to non-resident businesses with a UK VAT registration or only to UK businesses. We are proceeding on the basis that the deferral would also be available to non-resident businesses with a UK VAT liability.
  • Deferment is not available for VAT MOSS payments.
  • VAT refund returns should be processed and paid by HMRC as normal.

Income tax Payment on Account due 31 July 2020 deferred

All taxpayers with a second self-assessment payment on account due on 31 July 2020 can choose to defer payment until 31 January 2021. If you have a direct debit payment in place you must cancel this with your bank. 

Find out more on the Government's website.

How to apply

There will be a nationwide advertising campaign from Monday 23 March to communicate the measures.

Find out more on the Government's website.

The Chancellor made a plea to all business to review all options before considering making anyone redundant.  

What are my options if I am sick and cannot work?

Those who are not eligible for Statutory Sick Pay (SSP), for example the self-employed or people earning below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance:

  • For the duration of the outbreak, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, ensuring self-employed claimants will receive support.
  • People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.
  • Contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25, for eligible people affected by COVID-19 or self-isolating in line with advice from Day 1 of sickness, rather than Day 8.

Find out more on the Government's website.

Business cash flow and time to pay arrangements

For any business or self-employed people in financial facing financial distress at the moment, we’ve noted below some immediate steps you could take now:

  • Prepare regular updates to trading and cash flow forecasts, ensuring the business can remain on track in the coming weeks.
  • Review the cost base and take whatever restructuring and cost action is required to keep the business as viable as possible until trading hopefully recovers.
  • Be mindful of Director’s duties with regards to the solvency of the business.
  • Proactive discussion with bank and funders regarding the provision / extension of existing facilities.
  • Proactive discussions with customers about how to manage changes to Service Level Agreements/contracts.

If you need any support with these please do not hesitate to get in touch with the Johnston Carmichael team, we’re here to help.

Concerns about paying your tax bill – use the Time To Pay service

We would recommend constant dialogue with customers and bank funders to ensure ongoing relationships through this time.

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you are concerned about being able to pay your tax due to coronavirus, please call HMRC’s dedicated helpline now: 0800 024 1222.

More guidance

HMRC’s dedicated helpline aims to support businesses affected by coronavirus and allows access to tailored support and advice. Further details of the helpline can be found on the Government's website.

Grants available to small businesses

The government has introduced small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief. This has been increased from the previous grant available of £3,000 and now includes self-catering accommodation in Scotland.

Check the Scottish Government’s website for a link to your local council’s application page. 

Find out more on the Government's website if you are in England.

Companies House - apply for an extension to your filing deadline

Companies House have issued guidance  that if, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to a company being affected by coronavirus, the company may make an application to extend the period allowed for filing. Full information is available on the Companies House website. If you need support to do this, please get in touch with your Johnston Carmichael adviser. 

If you do not apply for an extension and your accounts have been filed late, an automatic penalty will be imposed. The registrar has very limited discretion not to collect a penalty, however any appeal is treated on a case-by-case basis, and Companies House already have policies in place to deal with appeals based upon unforeseen poor health. Appeals based upon COVID-19 will be considered under these policies.

Find out more on the Companies House website.

Other resources

There is more information available from government and support agencies across the UK. 

Johnston Carmichael are not responsible for information contained on external websites.