Newsletter – 11th May 2020
Self-Employment Income Support Scheme
Applications for the latest UK Government Coronavirus Support Package will be open this week. This follows support for businesses with commercial properties/offices through the Business Rates Grants and then support to employees through the Furlough Scheme. The Self-Employed Income Support Scheme is the last main grant that was initially announced by the Chancellor and is available to those individuals who are self-employed. Please note this does not include owner/directors of limited companies.
To qualify for the grant you need to have:
- been trading in 2018-2019 and submitted a tax return for that period;
- traded in 2019-2020 and intend to continue to trade;
- been adversely affected by coronavirus;
- trading profits of less than £50,000 but it must be at least half of your total income
A quicker way to see if you qualify will be to access HMRC portal eligibility checker. You will need your Unique Tax Reference (UTR) number and National Insurance (NI) number to see if you qualify.
How to claim?
Your accountants (or ‘tax agents’) will not be able to make the claim on your behalf. Individuals will need to make the claim themselves through their online account with HMRC. The above link will also tell you when you can make a claim as individuals have been given different time-slots, presumably to avoid the system crashing with so many anticipated applications. The first claim will be available from 13 May.
To set up your online HMRC accounts you will need a Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online. To create your ID you will also need your passport or driving licence details in addition to your UTR and NI number.
To complete the claim you will also need to provide details of the bank account number and sort code you want the grant to be paid into. When the claim is made you will be notified if it is approved straight away and the grant will be paid within 6 working days.
How much is the grant?
The grant will be 80% of your average monthly trading profits for 3 months. The grant is capped at £7,500 (£2,500 per month) similarly to the employee furlough scheme. The monthly average will be based on an average over the last 3 tax years to 2018-2019 and the online service will tell you how HMRC have calculated this figure.
I previously commented on the difficulties in getting access to funds through the Coronavirus Business Interruption Loan Scheme (CBILS). As a result of these difficulties the Bounce Back Loan Scheme (BBLS) was introduced. These are targeted at smaller businesses to borrow between £2,000 and up to 25% of their turnover up to a maximum of £50,000.
The advantages of these schemes are that they appear much easier to apply for (I have seen them applied and approved for in less than 30 minutes); you do not need to provide any personal guarantee as they are 100% guaranteed by the government and you do not need to make any repayments for the first 12 months. After the first 12 months the interest will be 2.5% per annum.
The business needs to be based in the UK, established before 1 March 2020 and adversely impacted by coronavirus. If the business was in difficulty on 31 December 2019 there will be further criteria you will need to follow.
There are 11 lenders in the market for these loans and if one turns you down, you can apply to another. I have noted that the interest rates charged for these loans can sometimes be much smaller than interest rates that have been charged by lenders in the past for relatively new companies / start-ups. These loans might therefore be useful to replace existing (and more expensive) borrowing arrangements that a business might currently hold. However, the terms and conditions of each lender should be reviewed carefully to ensure you can use the loan for the purposes that you intend to. Click here for further details.
Economic Resilience Fund
The Economic Resilience Fund was a Welsh Government support package intended to fill some of the gaps left by other support packages. However, after the first week of applications the fund was “paused following the very large number of applications to give Welsh Government an opportunity to consider what further support businesses, charities and social enterprises need”. We understand that several applications failed because there was only one owner/director in the company making the application. We were hoping that these small businesses would be eligible for the grant as they fall foul of some of the support packages previously made available such as the Business Rate Grant, Furlough Scheme and Self-Employed Income Support Scheme. We hope the Welsh Government’s review will take these shortcomings into account.
I will keep you up to date with any further information I receive and if you need any further advice please don’t hesitate to contact me. Again, thank you for your continued support and I hope that you are all keeping safe and well.