Published: November 20th, 2020 in Budget/Finance News, Finance News, Latest News
This year has been a rollercoaster of a year for everyone. Businesses of all scales have seen new obstacles present themselves, however, some of the hardest hit in these current times have been those who are self-employed.
And, while there has been a lot of discussion around what grants for self-employed people there are and what general help for the self-employed is out there, it can be quite difficult to stay on top of what the current options are for you if you are self-employed, and what the future may hold. So, hopefully, the information below will be able to shed a little light on the most recent government grants for self-employed workers, and help keep you on your feet.
What Do Recent Changes Mean?
The Coronavirus Self Employed Income Support Scheme (SEISS), was set up in order to provide financial security for those who are self-employed in a similar way to those who are employed workers. Over the previous few weeks, however, there have been a number of changes to the self-employed income support schemes, and there have even been some self-employed workers who have missed out.
On November 2nd 2020 it was announced by Chancellor Rishi Sunak that the UK-wide SEISS will be made more generous, providing income support for the self-employed by having them receive 80% of their average trading profits for the month of November.
This will be the third instalment of the UK-wide government grant for the self-employed, and it has been assured that grants will be paid out faster than previously done so due to the claims window being opened on November 30th, as opposed to December 14th as initially proposed. The government’s hope is that the grant will be able to provide support over the Christmas period for those who cannot conduct their business or have experienced reduced income due to the pandemic.
How Do The Grants Work?
SEISS grants are worked out across a three month period. This means that this new taxable grant will make up for 80% of your profits for the months of November, which coupled with your 80% of trading profits from December and January, will mean that you will be able to receive a total of 80% of your trading profits across the three month period. Therefore, the maximum grant is increased to £7,500 — payable in one single payment.
There was also an announcement from the government that a fourth grant will be made available covering the months of February 2021, March 2021, and April 2021. Although, they have not yet announced the terms of this fourth grant, much to the dismay of self-self-employed workers across the UK.
Initially, the government’s plan was to only cover 40% of profits, which was then upped to 55% of profits across the three month period, and now it has once more been upped to 80% of total profits across all three months. Furthermore, it has been made apparent that businesses will be able to apply to banks for government-backed support loans until the 31st January, according to the BBC. This is an increase in time frame from the initial 30th November deadline for some support schemes.
In relation to the improved scheme, Business Secretary Alok Sharma said, “We know what an incredibly difficult time it has been for self-employed workers across the country. We are determined to support them. Today’s measures will mean people will receive more money in their back pockets, faster, to help them through the winter months ahead.”
Am I Eligible For The Grant?
In order to be able to successfully apply for the governments’ self-employed income support, then it is vital that you meet a series of criteria in advance. For instance, it is crucial that at least 50% of a claimant’s income is provided by self-employment.
Furthermore, an individual must be prepared to declare that they mean to carry on trading in the future, or that they are presently trading however are experiencing diminished demand as a result of the coronavirus pandemic.
Alternatively, a person must have been formerly trading, although are unable to do so temporarily due to COVID-19. Those who are on the lowest incomes are projected to benefit from more substantial payments, according to the BBC, with the newly self-employed being unable to qualify as more recent tax details are not being considered.
Additionally, certain individuals who pay themselves via their own company may not be successful in applying for the scheme. Although, their salary may be covered by certain job retention schemes.
When you apply for the grant through the government’s website once applications are being accepted, HMRC will judge if you are eligible by analysing previous information after you have already declared that you meet the requirements. And, if you are successful, the money shall be transferred directly into your bank account.
Apparently, sadly due to these various parameters, there will be a large number of self-employed workers who will remain ineligible for the scheme, with some reports being that an approximate 18% of people for whom self-employment is their primary source of income shall be ineligible, prompting justifiable outrage from the public, and some MPs, across the UK. At present, it is estimated that there are over five million people who are self-employed across the UK. And, across those roughly five million, their average earnings are reportedly around £781 per month.
How Does The Future Look?
With no certainty regarding the future of the coronavirus pandemic, and no clear end to this period in sight, the future looks sadly uncertain for those who are self-employed. Hopefully, this scheme will be able to help those who are in need, and if you feel that you are eligible or simply need more information regarding the scheme, then head over to the government’s website.
