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).
Self-Employment Income Support Scheme (SEISS) - fourth and fifth grant
Applications for the first three grants are now closed. The budget announced that there will now be two further grants and eligibility for these has been extended to include self-employed people who have filed a 2019/20 Self-Assessment tax return and will therefore cover the more recently self-employed (previously you needed to have filed a 2018/19 tax return to qualify).
SEISS fourth grant
The budget confirms that the fourth SEISS grant will be worth 80% of three months' average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April 2021.
The online claims service for the fourth grant will be available from late April 2021 until 31 May 2021. If you are eligible, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.
Details of the fourth grant are here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
SEISS fifth grant
The fifth and final SEISS grant will cover May to September 2021. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months' average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July. Further details will be published in due course. The fifth grant will require a Financial Impact Declaration that determines whether applicants are eligible for either a higher or lower grant amount based on how much their turnover has reduced in the year April 2020 to April 2021.
Useful advice here: Coronavirus Self-Employed & Small Limited Company Help from Money Saving Expert
The Welsh Government have teamed up with credit unions in Wales to offer low interest loans for tenants in rent arrears. The Tenancy Saver Loan scheme will be open to private rented sector tenants in rent arrears and those who may also struggle to pay future months' rent as a result of coronavirus; it will be open until 31 March 2021: gov.wales/scheme-help-tenants-affected-coronavirus-launches-wales
If you are in this situation, please first get a benefit check to ensure you are receiving all available help through Housing Benefit and Universal Credit housing costs first, before taking on further debt. If you are eligible for Housing Benefit or Universal Credit including housing costs in your UC maximum amount, please consider applying for a Discretionary Housing Payment to help with any shortfall between their benefits and rent, before applying for a loan.
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 closes at the end of September 2021, even if you are not using the scheme.
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 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.
If you are currently 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.
Universal Credit claims are made and managed online via a 'journal'.
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.
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 job centres not being open, unless the claimant is vulnerable and cannot meet the requirements by phone.
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. The suspension of the Minimum Income Floor due to coronavirus has now been extended until the end of July 2021.
Any financial assistance you receive from the self-employment income scheme 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.
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 firstname.lastname@example.org.
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 email@example.com. 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.