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Protecting your freelance business from COVID-19

We’re in uncharted territory with Coronavirus, and freelancers are understandably feeling the pressure and fear. We’ve gathered together some of the best sources of advice for how to be proactive in protecting your business

UPDATE – 26 March 2020

Government reveals Self-Employed Income Support Scheme

The government has unveiled a support package for self-employed workers that will be available for three months. However, much like other business support measures that have already been announced, this will remain under review.

What you need to know if you’re self-employed:

  • You’ll receive a taxable grant of 80% of your average monthly profits over the last three years, based on tax returns filed.  You must have filed a tax return for 2018-19.  The maximum payable will be £2,500 per month, the same maximum as for ‘furloughed’ employees.
  • If you don’t have three years of tax returns, the grant will be paid based on whatever tax returns you have submitted.  If tax returns for 2019 have not yet been filed (they were due by 31 January 2020), you now have four weeks to get them submitted.
  • Self-employed businesses that have a trading profit of £50,000 or less and who make most of their income from self-employment will be eligible to claim the grant.
  • Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
  • There will be a delay while HMRC sets up new systems to process the grants, which are not expected to be ready until early June.  HMRC will contact those who have filed returns to ask you to complete an online form.  The grant will then be paid as a single payment covering three months straight into your bank account.
  • In the meantime, you can access business interruption loans, available interest-free for 12 months.
  • You can access Universal Credit at the same rate as Statutory Sick Pay is paid for employees.  The minimum income floor for Universal Credit has been suspended for everyone affected by the Coronavirus so a self-employed person with no income should be able to claim Universal Credit at a similar rate to someone who is unemployed.  In his announcement, the Chancellor also said that advance payments can be made ‘within days’ after a claim is submitted, rather than the usual wait of five weeks.

UPDATE – 23 March 2020

As of 23 March 2020, all non-essential shops and services have been ordered to close for a minimum of three weeks.

HMRC

HMRC have created a phone helpline to support and advise freelancers and the self-employed affected by Coronavirus uncertainty. It’s bound to be a busy line, but there are 2,000 experienced call handlers on hand to offer advice and practical support.

Call on 0800 0159 559, open 8am-8pm (Mon-Fri) and 8am-4pm (Saturday).

If you are set up as a limited company you may benefit from the £330bn package of help offered by the Government. Don’t forget this is an offer of a loan and will have to be repaid, but it could be the best option to inject cash into your business.

IR35, which treats freelancers on long-term contracts in the same way as employees for income tax purposes, has also been postponed for a year. All VAT returns have been delayed until the end of June and self-assessment income tax returns will not have to be made until January 2012.

Claim benefits

With a short, sharp shock to the economy like this, even the best savings plan will be under pressure. As self-employed people aren’t entitled to statutory sick pay, the government has made changes to allow you to claim Employment and Support Allowance (ESA). Eligibility will depend on your individual circumstances, so it’s best to contact the Universal Credit Helpline on 0800 3285644 (choose option 2) Monday to Friday 8am to 6pm. Further information can be found here.

The Treasury has also relaxed the rules around claiming Universal Credit- the relatively new set of benefits that replaces things like job seekers allowance and housing benefits. The minimum income threshold has been scrapped. Universal Credit ‘standard allowance’ – £323.22 a month for single people and £507.37 a month for couples – will be raised by £1,000 for the next 12 months, with working tax credits increased by the same amount. To get this support you will need to be able to show that:

  • Self-employment is your main job or your main source of income.
  • You get regular work from self-employment.
  • Your work is organised – this means you have invoices and receipts, or accounts.
  • You expect to make a profit.

Find out more about this here.

Mortgages

Jump on the phone to your mortgage lender and see if you qualify for the three-month mortgage holidays that have been announced. It’s not a perfect system – you’ll still pay interest and have to make up the repayments in future, but it can relieve a lot of the monthly pressures. Renting instead? New emergency measures mean that landlords can’t evict you for falling behind on payments.

Lean in

The hairdressing community remains a welcoming, supportive sphere, even within crisis. Lots of education and resources have been made available for free – if you’ve always wanted to build a stronger business plan, learn how to curate a better Instagram feed or research new services then now is the time to do so.

Contact your MP to lobby them for more Government help. The MP Tracy Brabin is compiling a dossier on how COVID-19 is affecting the self-employed. If enough people tell the government what is going on out there it may help form future policy.

Think outside the box

There is work if you need it – even it’s just not in hairdressing. If you’re in dire straits, don’t hesitate to look outside of the industry for opportunities. These are not normal times, and there is no set time frame for when things might return to normal either. Don’t consider your business a failure if you have to look elsewhere in the meantime – you’re providing means to keep your business alive in the longer term.