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Benefits for people who are self-employed (COVID 19)

The Government has provided a Self-employed Income Support Scheme (SEISS), as an equivalent to the Job Retention Scheme for employees, to assist people who are self-employed or a member of a partnership and have been adversely affected by coronavirus (COVID-19).

The deadline for applying for the first SEISS grant has now closed.

It is a grant and previously the SEISS covered three months - March, April and May 2020.

The SEISS has now been extended and a second and final grant will be available if your business has been adversely affected by coronavirus on or after 14 July 2020 you'll be able to make a claim from 17 August 2020. You can make a claim for the second grant if you're eligible, even if you did not make a claim for the first grant.

This scheme is open to self-employed workers even if they do not have recourse to public funds.

Second SEISS grant

The second and final grant is capped at £6,570. The grant is worth 70% of your average monthly trading profits, paid out in a single instalment covering three months' worth of profits. You will be able to claim the second and final grant from the 17 August when the online service will be available. The eligibility criteria is the same as for the first grant:

The conditions of the scheme are quite complicated and the information on the Gov.uk website states that:

You can claim if you're a self-employed individual or a member of a partnership and all of the following apply:

  • you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
  • you traded in the tax year 2019 to 2020
  • you intend to continue to trade in the tax year 2020 to 2021
  • you carry on a trade which has been adversely affected by coronavirus

Your business could be adversely affected by coronavirus if, for example, you're unable to work because you:

  • are shielding
  • are self-isolating
  • are on sick leave because of coronavirus
  • have caring responsibilities because of coronavirus
  • you've had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work

You should not claim the grant if you're a limited company or operating a trade through a trust.

To work out your eligibility HMRC will first look at your 2018 to 2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you're not eligible based on the 2018 to 2019 Self-Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
Find out how we will work out your eligibility including if we have to use other years.

For information on how to claim take a look at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

It is also worth looking at the information on https://www.moneysavingexpert.com/news/2020/04/self-employed-help-coronavirus/

If you are not eligible for a grant from SEISS, then it may be worth seeing if you can get help from the Bounce Back Loan: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan although as this is a loan and you might want to seek independent financial advice first.

Further guidance will be available when the online service is available and you can sign up for email alerts at https://www.gov.uk/email-signup?topic=/topic/business-tax/self-employed

 

Self-employed and receiving Working Tax Credit

If you are self-employed and receiving working tax credit and your hours of work have temporarily reduced due to COVID-19 you will continue to be treated as working your usual hours for working tax credit. The government has confirmed that you will still receive your usual tax credit payments providing that you are still self-employed, this will not apply if you cease trading. HMRC will continue to treat you as working your normal hours until the Job Retention Scheme and Self-Employment Income Schemes close, even if you are not using the scheme.  

Both schemes close on 31 October 2020, and therefore you should inform HMRC if on 31 October if you are still not working your usual hours.  If after this period your usual hours of work have not been reinstated you should qualify for the 4 week run on of Working Tax Credit.

A change of your earnings is not a change of circumstances that you have to report for tax credits; however by reporting this change you are reducing the risk of being over or underpaid when they finalise your award at the end of the financial year.  If you have had a change to your earnings and want your tax credits recalculated you should ring Tax Credits on 0345 300 3909 or can report changes online https://www.gov.uk/changes-affect-tax-credits. The first annual £2,500 of any increase or decrease are disregarded, this means that even though your income has reduced you may not be entitled to an increase in your tax credit payments.

Tax Credits are calculated on your annual income and having a lump sum as income from SEISS will not necessarily mean that this one-off payment means you are no longer entitled. The amount of tax credits you receive are provisional based on an estimate of the amount of taxable income you receive. At the end of the financial year your tax credit award is finalised and based on actual taxable income received. The SEISS payment will be included as taxable income you receive when HMRC finalise your income at the end of the financial year.

Important: if there has been any change that means you are no longer claiming as a couple and need to make a claim as a single person or become part of a couple - this always means you have to make a new Tax Credit claim, which means you will usually need to claim Universal Credit.

 

Self-employed and claiming Universal Credit

If you are self-employed and your earnings have stopped / reduced and you are not receiving tax credits but need to make a claim for a means-tested benefit for the first time you may be entitled to claim Universal Credit.

Universal Credit is a means-tested benefit for people who are of working age (18 to pension age) and has replaced new claims for Income-based Jobseeker's Allowance; Income-related Employment and Support Allowance; Housing Benefit; Income Support; Working Tax Credit and Child Tax Credit unless you meet the SDP (severe disability premium) gateway conditions. 

Once you have claimed Universal Credit you will not be able to re-claim the legacy benefits unless you meet the SDP (severe disability premium) gateway conditions. If you are receiving one of these benefits you are advised to have a better off calculation to check if you are better off staying on your current benefits with adjustments or claim Universal Credit.

Claims are made and managed online via a 'journal'. The Government have announced that once you have made a claim online, if they need any further information to process your claim, they will either request this via your online journal or call you. You do not have to call them.

If you are a couple and one of you is over pensionable age and one of you is under pensionable age in benefit terms you are a mixed aged couple - seek advice before claiming Universal Credit and see the advice on: Benefits for mixed-age couples (COVID 19).

To qualify you (and your partner if you have one) must have less than £16,000 in capital and meet the means test. The amount you are entitled to will differ depending on your personal circumstances, what other income or earnings you have coming in and the amount of savings you have between £6,000 to £16,000. However the government have announced that savings you have put aside to pay your tax bill should not be taken into account https://www.moneysavingexpert.com/news/2020/04/self-employed-with-cash-saved-to-pay-tax--it-won-t-be-counted-as/. The SEISS grant will not be taken into account as capital for 12 months after you receive it, make sure when you claim Universal Credit, that they are aware of any money in your bank account that has come from the grant - see below for how the SEISS grant is treated as income.

All Universal Credit claimants and their partners must have a signed claimant commitment which will outline their work requirements in order to receive this benefit.

Until July it was straightforward that work search and work availability requirements were suspended and sanctions for failing to comply had been removed. Now it is unclear, the three Swansea Jobcentres remain closed except for emergencies and interviews remain being done by phone, the local Jobcentre partnership manager has agreed to contact the Welfare Rights Team when the arrangements change, but currently there are no dates for the opening of local jobcentres.  As far as we know, you should not be subject to any sanctions until your claimant commitment has been updated and in affect nothing appears to have currently changed.

Claimants and their partners will be subject to work-focused interviews and work preparation requirements, however these requirements currently remain limited due to coronavirus and the local jobcentres not being open.

The Summer Statement from the Chancellor on 8 July 2020 confirmed that additional work coaches will be employed to assist new claimants to return to work, the effect of coronavirus has meant many more people have needed to claim Universal Credit.  The amount of the flexible support fund available to the Jobcentre staff to help you obtain work or additional work will be increased, as well as additional support for people under 25.  There is a plan for additional support online support from the private sector in the autumn, if you have been unemployed for less than three months, but no details have yet been announced.

Universal Credit can be the only income you have coming in or top up other income to the amount that the Government says that you need to live on.

Self-employed workers have the minimum income floor applied once they have been self-employed for 12 months or more. This means that the Department for Work and Pension will treat you as receiving notional income regardless of what you actually earn. Whilst this minimum income floor has been suspended for 12 months which means that the actual amount of profit you receive from your self-employed earnings will now be taken into account, this is only a temporary measure.

Any financial assistance you receive from the self-employment income scheme in June will impact on your Universal Credit award. There is a rule called 'surplus earnings' for Universal Credit and if you receive the SEISS grant, which is a lump sum, it will be taken into account as earnings for the 'assessment period' you receive it in. However any losses you have had can also be carried over https://www.gov.uk/universal-credit/how-your-earnings-affect-your-payments, this is a complicated rule and you should seek further advice. Information and an online tool that may help you work how surplus earnings may affect you can be found at https://www.ferret.co.uk/reckoners/free/.

If this lump sum takes you out of entitlement for Universal Credit for that assessment period, the surplus earnings rules can affect you for up to the next six month assessment periods. It is important for you to budget for the following month as you may not receive any Universal Credit payments. The Government made new regulations on 21/05/20, so that you can be treated as having reapplied for Universal Credit at the start of the next assessment period following the period that your income took you out of entitlement to UC, and this can continue for up to a maximum of 5 assessment periods. But our advice is to check that this auto-reclaim has happened after each assessment period where you had nil entitlement due to the grant until you become entitled to Universal Credit again and to ensure that Universal Credit also take account of any expenses and loses you have.

 

Self-employed and sick

If you have paid the correct level of national insurance contributions for the relevant period you may qualify for 'New-style' Employment and Support Allowance.

If you are receiving working tax credit and become sick, you may continue to qualify.

Further information that will apply to you if you become sick due to coronavirus.

 

Self-employed and Council Tax Reduction 

If you are on a low income or in receipt of Universal Credit you could get Council Tax Reduction to help you pay your Council Tax. How much you may get will depend on your income and circumstances. You can make a claim online. If you are already in receipt of Council Tax Reduction and your income or circumstances have changed please report the change online or email benefits@swansea.gov.uk.

 

Self-employed and Housing Benefit 

If you are already in receipt of Housing benefit and your income or circumstances have changed please report the change online or email benefits@swansea.gov.uk. A new claim for Housing Benefit can be accepted in limited circumstances. More information on Housing Benefit

If you are renting from the private sector the amount of help you get due to your eligible rent from the local housing allowance has increased for this year, the current maximum amounts are here: Local Housing Allowance rates. The over inflation increases are currently for 2020/21 only, although we do not currently know if they will reduce to previous levels next year.

More information

https://www.moneysavingexpert.com/news/2020/03/coronavirus-self-employed-and-employment-help/

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