While there has been plenty of coronavirus support for limited companies, those working via self-employment may feel they’ve had less support. Starting from May 13th, self-employed sole traders and members of partnerships will be able to claim a grant from the government: The Self-Employment Income Support Scheme. How does it work, and what can you do if you’re not eligible?
What is the Self-Employment Income Support Scheme?
The Self-Employment Income Support Scheme is a government grant scheme for coronavirus-affected sole traders. It will allow the self-employed who’ve been affected by the coronavirus, to claim a taxable grant for up to 80% of their average monthly trading profits for up to three months; up to a total of £7,500.
How do I apply?
To apply for the Self-Employed Income Support Scheme, you’ll need to complete an online application and submit your National Insurance number along with your Unique Taxpayer Reference (UTR) to HMRC.
Your eligibility is based on several factors:
- You traded in the 2018/19 or 2019/20 tax years and submitted your tax return for the former.
- You intend to keep trading in the 2020/21 tax year.
- Your business has been affected by the coronavirus, or if you’re unable to work as a result of shielding, self-isolation or sick leave.
- Your business has scaled down because of coronavirus-related circumstances.
If you are eligible, HMRC will direct you as to what to do next.
What if I do not qualify?
If you’re not eligible for the scheme, you can request a review of the decision, but we can explore other options as an alternative. Whatever the best route is for your business, we will work to find the best option to help you get through the coronavirus pandemic.
One of the ways we can help you if your application is turned down is the Coronavirus Business Interruption Loan Scheme (CBILS), or the Bounce Back Loan Scheme.
We have a commercial finance team who can explore several financial solutions to rebalance your cash flow. These solutions could take the form of invoice finance or factoring, bridging loans, trade and asset finance. Working closely with a range of accredited lenders, we will help you find the solution best suited for your needs.
Individual Voluntary Arrangement (IVA)
If your business model would be viable without its debt (coronavirus related or otherwise), you can apply for an Individual Voluntary Arrangement (IVA). An IVA is a formal payment arrangement for individuals and sole traders, allowing them to repay their unsecured debts in affordable monthly instalments at a tailored rate. These arrangements normally last for five years, and at the end of the arrangement, any remaining unsecured debt is written off. During the IVA, pressure from your unsecured creditors is halted.
Time to Pay Arrangements (TTP)
Time to Pay Arrangements (TTP) are for businesses whose primary creditor is HMRC. They are informal arrangements which allow businesses and individuals to repay their debt at a rate which they can afford. Debt to HMRC can be in the form of National Insurance, Corporation Tax, PAYE, or VAT. As with an IVA, a TTP halts pressure from all the included creditors.
To apply for a TTP, you need to submit a proposal to HMRC. Speak to us if you’d like to apply; we have a long-standing relationship with HMRC and have developed considerable negotiating power.
The Self-Employment Income Support Scheme intends to support self-employed workers affected by the coronavirus. Sole traders can claim a taxable grant for up to 80% of their average monthly trading profits, up to a maximum of £7,500. You can apply online using your National Insurance number and Unique Taxpayer Reference. If you don’t meet the scheme’s criteria, you can still apply for other government support such as the Coronavirus Business Interruption Loan Scheme or the Bounce Back Loan Scheme. You can also apply for individual insolvency agreements, such as an Individual Voluntary Arrangement (IVA), or a Time to Pay Arrangement (TTP).
How we can help
Whether you’re a sole trader struggling with coronavirus-related debt, or an individual struggling to stay on top of your debts, speak to us today. Our initial advisors can provide you with free, impartial advice with no obligation. Get in touch, and we’ll put you on the best path for your circumstances.
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