What support is there for self-employed and owner managed Ltd Company directors?
In general, most self-employed and owner managed Ltd company can apply for the following available options to support them financial in this unprecedented crisis. The Chancellor Rishi Sunak has stated numerous of times that Govt will do ‘’Whatever it takes’’ to support small businesses. This includes both employed and self-employed businesses.
- Universal Credit.
- New style Employment and Support Allowance
- Government Grant.
- Business Interruption Loan Scheme
- Delay in Payment on Account and tax payments
- Defer VAT Payment until June 2020
- Coronavirus Job Retention Scheme
- Self-employed Income Support
1: What is Universal Credit:
Universal Credit is a payment you can receive from the govt if you are on low income or out of work. Both Employed and Self-employed people can apply for Universal Credit. The Chancellor also pledged to increase standard Universal Credit allowance by £1000 for next 12 months.
It is worth knowing that single owner managed Ltd companies are also treated as as self-employed / sole trader for the purpose of Universal Credit UC.
The main criticism Universal Credit has always received for self-employed claimant since its launch, is the application of minimum income floor rules. However in this unprecedented crisis Govt has confirmed that during this outbreak they will suspend minimum income floor rules making it easier for all self-employment workers to access cash they need in this crisis moment. As minimum income floor has been temporarily removed, self-employed people will now be treated an equivalent as employed people within universal credit system.
- What is the minimum income floor:
Previously, if someone had been working as self-employed for 12 months or more, DWP would apply minimum income floor to them, which is actually an income assumption about the income they earn, no matter whether or not they are actually earning it.
- What if I’m self-employed or director and receiving Universal Credit already?
If you’re self-employed and receiving Universal Credit and you’ve got COVID-19 or are advised to self-isolate, rules around minimum income floor is going to be temporarily relaxed to make sure that self-employed UC claimants will receive full support.
- What if i’m self-employed and NOT currently receiving Universal Credit?
If you have COVID-19 or advised to self-isolate, you can now make a fresh new application online and also claim and access Advance Payments upfront without having to attend a Jobcentre Plus. If you’re eligible for new style Employment and Support Allowance, this will also be payable from day 1 of sickness, instead of day 8.
Going forward, if you income from self-employment stays low during this unprecedented crisis then you will continue to receive support depending on your monthly household income and savings on your actual earnings with no earning assumptions.
You can apply for Universal Credit (UC) by clicking here
2: New style Employment and Support Allowance:
If you’re sick or have medical condition or disable that may impact on your work ability you may be able to claim Employment and Support Allowance also known as ESA.
ESA is also available to those who have savings over £16,000.
To be eligible for ESA you should have been working in last 2-3 years and pain in or received enough National Insurance contributions credits Class 1 or Class 2. Your NI contributions can both be either employed or through self-employment.
You can claim ESA by completing the attached form. Please click here to download ESA form
3: Government Grant:
The Government is providing additional funding to local council authorities to support small businesses. Although this may not be applicable to many self-employed or small owner managed companies but small businesses who have a business premises or received small business rates relief from council can receive up to £10,000 grant from government.
The main eligibility criteria for government grant is as follows, you’re eligible if:
- You have business based in England
- You are a small business already receive small business rates relief
- You are a small business who occupies a property
There is higher grant available for retail, hospitality and leisure business up to £25,000.
4: Business Interruption Loan Scheme:
Business Interruption loan scheme will be available as early as next week delivered by the British Business Bank. The government will back up the Coronavirus Business Interruption Loan scheme by providing lenders with a guarantee of 80% on each loan to provide confidence to lenders.
Your business is eligible if you meet the following criteria.
- Your business is based in UK, with turnover less than £45 million a year
- Your business meets British Business Bank eligibility criteria
Further information regarding this is due to come out early this week. Feel free to get in touch with out experts by clicking here to receive an update.
5: Delay in Payment on Account and other tax payments:
The Chancellor, Rishi Sunak confirms that he is going to defer self-assessment payments on account (originally scheduled for 31 July 2020), to January 2021 now.
HMRC has also set up business support helpline to offer practical help to those who are unable to make tax and VAT payment to HMRC due to Coronavirus epidemic crisis. Businesses can call HMRC on 0800 0159 559 to discuss their options.
6: Defer VAT Payment until June 2020:
The Chancellor, Rishi Sunak goes further along to offer businesses practical help by offering to NO VAT payments until June 2020. To help businesses with cash flow and protect jobs this new measure will allow all VAT registered businesses, both sole traders/self-employed or small managed ltd companies to delay their next quarter payment until June 2020. This may be further extended depending how next few weeks unfold.
7: Coronavirus Job Retention Scheme:
The Govt also announced plans to cover wages by 80% for at-risk workers for at least 3 months. The scheme financed through National Debt has NO LIMIT on funding and this lifeline for workers can be extended longer than 3 months if required. You can read full details about this scheme in our previous article by clicking here
8: Self-employed Income Support:
Likewise plans to support PAYE employees, Govt has now also announced plans to support self-employed workers for next 3 months by offering 80% of their average income. You can read full details about this scheme in our article by clicking here
- If you’re a tenant experiencing financial difficulties due to COVID-19, the govt will make sure you don’t face the threat of eviction for a minimum of 3 months:
- The government has agreed with mortgage lenders that they’re going to offer repayment holidays for initial three months to households in financial difficulty. This will also apply to landlords whose tenants are experiencing financial difficulties due to COVID-19.
- If you’re experiencing difficulty with personal loan repayments or credit card bills as a results of COVID-19, the Financial Conduct Authority (FCA) has also called on lenders to offer flexibility to which many major lenders have already made statements to offer this facility. If you agree a payment holiday together with your lender this will not leave any negative impact on your credit score too.
Our experts are here to help. Should you require any further help please feel to get in touch by clicking here