Government help available for the self-employed

This article is part of
Guide to advising the self-employed amid Covid-19

Government help available for the self-employed

Since 23 March 2020, the UK government has been offering financial support to British industry to assist businesses sideswiped by the coronavirus outbreak. This has been followed by additional advice for those who are self-employed.

In the UK, there are around 104,000 self-employed workers in financial services and insurance, according to the Office for National Statistics, as at December 2019. 

However, there may be substantially more than this number, given that many individuals will operate within a limited company structure, in order to win contracts from larger clients and for tax efficiency purposes.

For self-employed financial advisers, there are several forms of financial support available.

However, it is important to recognise that some of these support measures have significant consequences for the intermediary and their business.

“Since the UK first went into lockdown, Chancellor Rishi Sunak has introduced several support packages to allow businesses and individuals to access financial help,” explains Sherad Dewedi, managing partner of Shenward, an accountancy firm.

“However, the government has faced extreme backlash on the support made available for the self-employed. While some will fall through the gaps, others have a variety of avenues to access financial support.”

Get a cash shot

The most straightforward of all of the government’s policies for self-employed advisers has been the Self-Employed Income Support Scheme (SEISS).

Launched on 26 March 2020, SEISS is designed to support self-employed workers who had lost income as a direct result of Covid-19. 

The online service for SEISS launched this week, with payments due to start being made to the self-employed in the last week of May.

Under the rules of the scheme, self-employed advisers are able to claim a taxable grant of up to 80 per cent of their average monthly trading profits, which will be paid in a one-off instalment to cover three months of earnings. It is capped at £7,500 in total.

SEISS allows individuals to continue to work, or take on other employment.

However, you cannot claim under the SEISS rules if you are not a sole trader or in a limited partnership. You are also ineligible if you declared trading profits of more than £50,000 last year, or if your trading profits are less than your non-trading income. 

Those who failed to submit a self-assessment tax return for 2018-19 are also excluded. Remember that any grants under SEISS are taxable.

Should you furlough?

Self-employed advisers also have the chance to furlough themselves under the Job Retention Scheme (JRS). 

Doing so allows the government to pay 80 per cent of an intermediary’s wage plus employer national insurance and pension contributions.

The JRS is available to any self-employed individual who is signed up to the government’s Pay As You Earn payroll process and has a UK bank account. 

What about loans?

Self-employed individuals operating within a limited company structure may be eligible for one of the two loan schemes being offered by the government.