We know that freelancing life can be hectic and busy – especially in the middle of a pandemic when you might be juggling work for clients with homeschooling children and trying not to develop a vitamin D deficiency. That’s why here at Dinghy we like to keep an eye on the news and make sure that we keep you in the loop with any important information that could affect freelancers, but that you might have missed. Last week saw the unveiling of the Chancellor’s 2021 Budget. With coronavirus restrictions still having a huge impact on businesses and many industries like hospitality, leisure and non-essential retail still in shutdown, this was another budget where recovery and support schemes featured heavily. Unsurprisingly, Sunak used a large portion of the budget to address the pandemic and its economic impacts. The good news for everyone is that the response is working. The third lockdown has significantly reduced case numbers, and we have now reached the milestone of over 20 million people in the UK having received the first dose of their vaccination. The Chancellor stated the priorities of his budget were to protect jobs and livelihoods, to support businesses, and to help rebuild the economy.
But what does this mean for freelancers? Many were left out of previous support schemes and will be anxious to see the economy start to reopen and their workloads pick up. Here’s the Dinghy guide to what was in the Budget this year, and how we think it might affect freelancers.
Supporting the economy
On the current state of the economy, the news wasn’t great. The economy has shrunk by 10% since the start of the coronavirus crisis and the pandemic has resulted in over 700,000 lost jobs. To try and minimise the effects of this on people and businesses, Sunak has pledged £407 billion of support for the economy over this year, last year and next year. The furlough scheme has been extended again, to run until the end of September. If you have a PAYE job alongside your freelancing, or employ yourself through your own limited company, you may benefit from this, but the furlough scheme was not designed for freelancers and self-employed, so many won’t be eligible.
New SEISS grants – including good news for new freelancers
Most freelancers should, however, be able to benefit from the new Self-Employment Income Support Scheme (SEISS) grants that were announced in the budget. The grant scheme has been running since last spring, and the Chancellor announced that it will continue into the 4th and 5th rounds of grants, extending the scheme to September in line with furlough. These are grants of up to 80% of average trading profit for each 3 month period, up to a total of £7,500 per grant – and although the money is taxable, you don’t have to pay it back in the future. Previous rounds of grants were a welcome relief and an essential source of income for many freelancers impacted by coronavirus, but they didn’t include everyone. In a major change to the scheme this time around, newly self-employed people may be eligible for the grants, providing they submitted a 19/20 tax return before the deadline. That means that if you weren’t eligible for support before, you may now be entitled to some cash. Full details are here, and the 4th round of the scheme will open in April.
No mention of IR35
While some people may have been holding onto the faint hope that the government would announce another last-minute delay of the IR35 reforms in the Spring Budget, there was no mention of it at all, so we can expect the controversial tax law reform to come into force on the 6th April as planned. If you are a freelancer working through your own limited company or personal services company (PSC) these “off-payroll working” rules may affect you, so make sure you understand the ins and outs of IR35 before the April deadline. If you’re a sole trader, these rules don’t apply to you, so don’t worry about them.
Loan scheme and business recovery
There was also more support announced in the budget for businesses of all sizes to help them recover from the impacts of coronavirus. Of particular note was a new Recovery Loan Scheme, £25,001 to £10 million available to help businesses of all sizes grow and expand to help the reopening of the economy. Businesses in industries that have been hardest hit, like hospitality, leisure, personal care and gyms, are also seeing £5 billion investment in the form of Restart Grants – a one-off cash grant of up to £18,000 to help businesses to reopen as restrictions lift (scheme currently running in England only). While this might not be of direct help to most freelancers, the more businesses that survive and are able to continue trading once lockdown ends, the more potential clients will be out there looking for freelancers to join them and support them in building back.
New work opportunities
As part of the government’s ambitions to rebuild the economy post-COVID, and to solidify the country’s economic independence post-Brexit, the Chancellor announced the creation of the first-ever UK infrastructure bank and 8 new ‘freeports’ across the UK. Working together with private enterprise and local governments, the infrastructure bank will help to finance projects that support regeneration and development, with a particular focus on green technologies like carbon capture and green transport links. This is hoped to replace some of the low-cost finance that might previously have come from EU funding schemes and should be good news for job creation, which we hope will include opportunities for freelancers.
So there you have it – another budget with a rather singular focus, as the government continues to try to pull the economy through the shock of COVID-19. With the vaccination programme underway, the Chancellor is optimistic about the shape of the recovery, forecasting 4% growth in 2021, with the economy forecast to return to pre-COVID levels by mid-2022. Unemployment is also set to peak lower than expected. As restrictions begin to lift and businesses start to reopen, we hope they will be looking to the flexibility and talent of freelance staff to help them get back on their feet.
The extension of the SEISS grant will be welcome news to freelancers still struggling with low levels of work, or whose industries have been shut down, and it is fantastic news that new freelancers, who have been left out of previous rounds of support, can now claim a grant to help them along. Make sure you’re well placed to take on new opportunities as they arise by checking that your business insurance is up to date. Dinghy’s policies are tailored to freelancers and you can get all your cover in one flexible package, that you can turn on and off with the ups and downs in your workflow. For a quick, no-hassle quote, head to our website or give us a call on 0116 380 5654.