How do I claim a self-employed grant?

Linda J. Dodson

Who is eligible? 

Mr Sunak said that 95pc of self-employed workers would benefit. Any freelancer or contractor whose profits exceed £50,000 a year will be excluded as well as anyone who has newly become self-employed and did not fill in a self-assessment tax return for 2019.

Those who took a break from earning during the past three years, such as mothers who took maternity leave, will also suffer as their average will be lower. 

The majority of your income must come from your freelance or contractual work to qualify.  

How do you claim? 

The scheme was originally intended to launch in June but the start date was brought forward to May 13. 

Check on the Government website whether you are eligible to claim a grant.

What other support is available?

Self-employed workers can also apply for Universal Credit. This has been temporarily increased to match the levels of statutory sick pay (£94.25 a week). However those applying for Universal Credit for the first time will usually have to wait for five weeks to receive a pay cheque.

Business owners can claim support through the Bounce Back Loan scheme or the Business Interruption Loan Scheme. Freelancers can also defer tax payments due in July until January 2021 to help stop the gap until then. 

The grants will be available for up to three months, although the Chancellor said he would extend them if necessary. 

Will the self employed grant affect universal credit?

You can claim benefits such as Universal Credit to boost your income while you wait for the grant to come in this summer, however any money you receive from the grant will be treated as part of your self-employment income. That means, once the grant arrives, you may become ineligible for Universal Credit. 

Grants are backdated to cover the previous three months so the Government could, theoretically, say you have made a false benefits claim if your income for those three months, once the grant is taken into account, is over the maximum amount to qualify for the benefits. So far it has said it will not do this.  

Will the self employed scheme be extended?

The furlough scheme, which promises financial support to employees whose work has dried up, has been extended until October. The Government has not yet said whether its rescue package for the self-employed will be extended too. 

Will taxes for the self-employed go up? 

Catherine Kerr of Primas, a law firm, said the Chancellor’s comment about all workers paying in equally suggested he is planning to change how the self-employed are taxed in the future.

The Chancellor may choose to raise the National Insurance threshold to ensure more of the money earned by the self-employed finds its way into the hands of the taxman. 

Below are questions on the lockdown from our readers that Marianna has answered. We hold a Q&A at 1 p.m. on every weekday and you can send in your queries for our next Q&A to [email protected]

‘What will be used to calculate if I’m eligible for a government grant?’

Our first question comes from Andrew Flynn in the comments section. Andrew asks:

“What is the figure that is to be used to calculate if I am eligible. Is this after deductions or what is invoiced? I am a sole trader.”

Here’s what Marianna has to say:

HMRC will work out if you’re eligible based on your recent tax returns. To qualify for a government grant you must have: filled in a self-assessment tax return for 2018/19, made the majority of your income from your self-employed work and not be making profits of more than £50,000 a year.

‘I am in self-isolation and unable to work, what help is available?’

Our next question comes from a reader who’d like to remain anonymous. They ask:

“I’m self employed and because I have a health condition which makes me vulnerable, I have to self isolate for twelve weeks. I am unable to do my work during this period. I have savings over £16k which I’m using to live on. What help is available to me please?”

Here’s Marianna’s answer:

The Government has said that self-employed people who are having to self-isolate because of coronavirus will receive benefits worth the same amount as statutory sick pay. That should mean you receive Universal Credit payments of £94.25 a week. However you can be barred from receiving this if you have savings worth £16,000 or more. Any money you have invested in your own business will not count towards this. If you aren’t eligible for Universal Credit you might be able to claim a government grant covering up to 80pc of your profits and/or Employment Support Allowance (ESA). The criteria for the former is above and the latter here. 

‘I don’t have accounts yet, what help is there for me?’

Our next question comes from Dan Adams in the comments section. Dan asks:

“I started my industrial photography and portrait photography business (sole trader last year October time and February and March 2020 were both months that finally delivered more money in than I had going out. The coronavirus is busy trying to cut my business down at the knees with clients I had spent months of hard graft preparing for/lining up pulling out or postponing. I don’t have accounts yet obviously and anything I could put together would show a massive loss because of equipment purchases and sundry other start up costs. What help is there for me?”

Here’s what Marianna has to say:

Unfortunately if you only recently became self-employed and so didn’t fill in a self-assessment tax return for 2018/19 you won’t be eligible for a government grant. These cover up to 80pc of your usual profits. If you don’t qualify for a grant you could try claim benefits instead. You may be eligible for Employment Support Allowance (ESA) and/or Universal Credit. However there are restrictions on who can apply for these benefits which you can check here.

‘My Universal Credit claim was closed as I couldn’t prove residency, what should I do?’

Our next question comes from Ruben via emailRuben asks: 

“I’ve been living in the UK for 10 years and my Universal Credit claim got closed because they couldn’t confirm my residence. I’m self-employed and I’m renting my flat. What can I do?”

 Here’s Marianna’s advice:

Being a resident in the UK is not listed as a requirement for Universal Credit on the Government’s website so you should check again to see if you’re eligible. If not ask what documents they need to prove your residency. Maybe your self-employed tax returns showing you’ve been paying tax in Britain will count. 

If you can’t get Universal Credit you might be entitled to a government grant covering up to 80pc of your profits and/or Employment Support Allowance. The criteria for the former is above and the latter here. 

‘What about business partnerships?’

Mark Gilbert has a question in the comments sectionMark asks:

“Could I ask a question relating to business partnerships please, and in particular the cut off of £50,000.

“A business partnership’s profits may be slightly over the limit but each partner will only receive a portion of that amount.  For example a business with two partners and a total business profit of £52,000 where each partner takes 50% of the profit. In this example, each partner receives £26,000 but would not be eligible for the scheme as it would appear that the same cut off applies, even though a sole trader with profits of, for example £49,000, taking that full amount would be eligible for the scheme.

“This would appear to be a bit of a crack in the scheme that partnerships of a certain size fall through, leaving them with Universal Credit as their only option. Could you confirm if this is indeed the case?”

Here’s what Marianna has to say:

No, you should still qualify for the scheme. According to Sarah Coles of wealth manager Hargreaves Lansdown, as long as both of you are self-employed in your own right, share the profits between you and your share of the profits is below £50,000 you would still be able to get a grant – assuming you meet the other qualifying criteria.

‘I’m a landlord with a few commercial properties, do I qualify?’

Our next question comes from Peter Green via email. Peter asks:

“I am a landlord with a few commercial properties, all of which have had to close because of coronavirus and can no longer pay any rent. As I own them all outright, I cannot ask for a mortgage holiday. These rents are my main source of income. Do I qualify under the scheme for self-employed? Or should the lessees claim grants/loans from the government to pay me?”

Here’s what Marianna has to say:

Sadly most landlords do not qualify for a grant from the Government’s self-employment income support scheme. You could try claiming Universal Credit and/or Employment Support Allowance (ESA), however these have strict eligibility criteria and payments are quite low. You can find out more about both here. 

If your commercial properties are currently being leased out and the contract has not yet ended, the lessee should still be paying you.

‘When will the self-employed grant applications be issued?’

Our next question comes from Julie Arnison in the comments section. Julie asks:

“When will the application forms be issued by HMRC for the self-employed grant?”

Here’s Marianna’s answer:

The money for the Government’s grants won’t be available until early June so HMRC has until then to contact those who are eligible. It has not yet said when it will do this. 

‘If NI payments are to increase will the self-employed receive extra benefits?’

Our next question comes from Edward Arthur in the comments sectionEdward asks: 

“If in the event National Insurance payments are increased for the self-employed or sole traders will this mean they will be entitled to SSP and other benefits our PAYE colleagues enjoy?”

Here’s what Marianna has to say:

Chancellor Rishi Sunak did hint when he announced the support for self-employed people that they would have to pay for it with tax increases further down the line. This is likely to mean an increase in National Insurance (NI) payments for the self-employed. Even if a tax increase does take place it’s unlikely the Government will bring in extra benefits for the self-employed, such as sick pay and holidays, with it. Sole traders are a very diverse group and it would be hard to distribute and manage these benefits.

‘Do grants cover everything earned over the tax threshold?’

Our next question comes from Kate Saunders via emailKate asks:

“I am self-employed and in the last years only earnt on average £14,000 per annum. Will the 80pc support be 80pc of the £14,000 or simply on the profit (i.e. over the tax threshold?)

“I can’t find the answer anywhere and really would appreciate your help.”

 Here’s what Marianna has to say:

HMRC has said the grants will cover up to 80pc of your average profits from the past three tax years. This should be total profits and not just anything you make over the tax threshold.

‘What about small businesses that are incorporated and trade as a company?’

Jeremy Tozer has a question in the comments section. Jeremy asks:

“Why is there no help for us? Many small business owner-operators are not self-employed but are incorporated, and trade as a company; in my case this is for sub-contractor and professional insurance requirements.

“Typically, such owner-operators earn by way of dividend payments and not as employees.  Many do not work from rated business premises but from home offices or on client sites. We pay corporation tax and income tax on earnings and so on.

“We do not qualify for any of the rated business grants; we do not qualify for the PAYE 80%/£2.5k pm deal nor for the self-employed £2.5k pm equivalent.”

Here’s Marianna’s advice: 

Unfortunately you’re right. Many people in your position to operate as a limited company and pay themselves in dividends do not qualify for one of the Government’s grants for the self-employed. You could try claiming Universal Credit and/or Employment Support Allowance (ESA) instead although the payments for these are low. You can find out more about them here.

‘I have three income streams, will the government grant apply to just my main income?’

Our next question comes from a reader who’d like to remain anonymous. They ask:

“I work as a sole trader travel agent which is the main source of my annual income. I also earn income from a rental property, and receive a monthly payment from my husband’s business (he is a sole trader gardener) for admin work. Obviously as a specialist travel agent, my income has actually gone in to reverse as I have had to refund some commission earnings and there is no prospect of any income any time soon.

“Will the 80pc average for the Government scheme be of the sum of all three incomes, or just my main income as a travel agent?”

Here’s what Marianna has to say:

If all of your income comes from self-employed work, the self-employment income support grants should cover all of it. However you should check with HMRC.

‘I’m unsure as to whether I qualify’

Our next question comes from Sarah Marin Gutierrez via emailSarah asks:

“I am a self-employed cleaner and I work in pubs, which are closed temporarily due to Covid-19. I became self-employed in 2018 so I have had to declare to HMRC from April 2018 until March 2019 And April 2019 until March 2020.

 “So as far as I understand I don’t qualify to get the help in June 2020. And my wife will get only 80pc according to a letter sent from her employer. So she will receive only £1,250 and we have so many things to pay: a loan, bills, helping our elderly parents who live in Colombia. So could you please let me know what help I can get and how to apply?” 

Here’s what Marianna has to say:

If you filled in a tax return for the year 2018/19 then you should still qualify for a government grant. If so HMRC will contact you directly.

‘Does my son qualify?’ 

Annie Laws has sent in a question via email. Annie asks:

“My son is a freelance sound engineer who graduated in 2018. He has submitted tax returns for 2018-19 and will do for 2019-2020.  Obviously all his work booked for this year has been cancelled and he has zero income. I don’t think any government scheme will help him so he will need to rely on universal credit is that correct? He is applying for help with council tax but says he doesn’t qualify for housing benefit.  His only savings are a HTB ISA and a LISA, both of which are paid by me.”

Marianna has the following advice:

If your son submitted a tax return for 2018/19 he should still qualify for a government grant. However the issue many newly self-employed people are finding is that, when you first go freelance, your income is still quite low so a grant covering 80pc of your profits is still not very much. He could try claiming Universal Credit and/or Employment Support Allowance (ESA). You can read more about these here.

‘I worked abroad for ten years, will I be eligible?’

N Burrows has asked a question in the comments section:

“I worked abroad for ten years prior to being made redundant on January 31 when the UK left the EU. I was self-employed for tax purposes and always paid National Insurance. Will I be eligible for any support?”

Here’s Marianna’s advice:

This would depend on your tax affairs while you were living overseas. Hargreaves Lansdown’s Sarah Coles said that, if you were still completing tax returns in Britain and not exceeding the profit criteria, you may well still qualify.

‘I’m now unemployed and face defaulting on loan payments’

Our next question comes from Shane Bird via emailShane asks:

“I recently became self employed as of February 2020 as a carpet fitter. The work was steady and gave me enough to cover my bills. Although since Covid-19 the company I sub-contracted to has shut down.

“I have been applying for numerous jobs and know one is getting back to me due to the amount of applicants.

“I have also tried to apply for ESA, JSA, SSP and Universal Credit but due to the fact that I still live with parents and I only just become self employed I am not eligible for them.

“On March 12, 2020 I took out a loan to get a car and insurance which I can no longer afford due to me being unable to work.

“I have contacted Citizens Advice and all they can offer me is links to grants or benefits that I am not eligible for.

“What do I do if I can’t make the payments and I start faulting on them?”

 Marianna has the following advice:

As of this week banks are going to start helping customers struggling with debt. You can put a temporary freeze on loan and credit card repayments for up to three months. It’s important to remember that during this time interest will still be charged, so you’ll find you actually have to pay back more in the long-term. 

You can also take out an overdraft of up to £500. This is interest-free for three months so it may be better to take out the overdraft and use that to repay your loan if you can.

‘Should I rush to get my tax return in?’

Our next question comes from a reader who’d like to remain anonymous. They ask:

“I have a question for the next Coronavirus Q&A – specifically about tax returns and help for the self-employed.

“I filed my 2018/19 tax return (my first ever one) as I’ve been self-employed for less than two years.

“The end of the latest tax year is fast-approaching. I would prefer if the government could calculate my average monthly earnings from both my 2018/19 tax return and my (upcoming) 2019/20 tax return, since I’ve earned a fair deal more in my last year.

“Will the government be accepting 2019/20 tax returns from which to base the taxable grants? Should I bother rushing to get it in?”

 Here’s what Marianna has to say:

The Government has said grants will be calculated based on your profits for the past three tax years (so far 2016/17 to 2018/19). That means there’s no point rushing to get your 2019/20 tax return in now.

‘What about those who are self-employed and registered disabled?’

Our final question comes from via email from a reader who would like to remain anonymous. They ask:

“I am writing on behalf of anyone who’s self-employed and also registered disabled. According to the guidelines, those who are self-employed and disabled are not entitled to universal credit because they usually qualify for a severe disability premium. What help is there for them? I would also like to extend this to full time carers; what help can they receive?”

Here’s Marianna’s advice:

You should apply for the Severe Disability Premium. This is being phased out and will eventually be replaced by Universal Credit in January 2021 but until then you can still claim it. 

If you’re a carer and paid by the PAYE system, you can be put on furlough and the Government will cover up to 80pc of your salary. If you’re a carer working for yourself and count as being self-employed you might qualify for a government grant covering up to 80pc of your profits, providing you meet the criteria. 

Carers are also entitled to Statutory Sick Pay from day one of being ill if they have Covid-19, with the benefit paying £94.25 a week.

Carers who lose work because of coronavirus may also be able to claim Universal Credit and/or Employment Support Allowance (ESA). 

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