Okay, we know that budget-related news can be a snooze-fest, so in this article we’ve drilled down just to highlight the support measures that are relevant to freelancers like you. Just pay attention to this one blog, because this is where you can find out how you can claim financial support (aka: cold hard cash) if your freelancing business has been affected by coronavirus. And don’t skim over this if you’ve been left out of previous rounds of support either – because there might just be some good news for you in here too – woohoo!
Chancellor Rishi Sunak announced in the 2021 budget a new range of measures to help the economy recover from the ongoing coronavirus crisis. With the government’s map for lockdown easing looking cautious but optimistic, there is hope that businesses may soon be able to open up, which should bring with it new opportunities for freelancers. However, many have struggled through the pandemic, especially those new to freelancing who missed out on the initial rounds of government support schemes. We take a look at what support was announced in the budget and what freelancers might be eligible for this time round as we head out of what is hopefully the last lockdown.
SEISS is extended – and new freelancers are now eligible too
The Self-Employed Income Support Scheme (SEISS) has been the government’s primary source of support for freelancers and other self-employed people throughout the pandemic. In the March budget, it was announced that this scheme will be extended until September, meaning that there will now be a 4th and 5th round of these grants. Each grant covers a 3-month period, and provides support of 80% of trading profits, paid out in a single installment, of up to £7,500. Unlike some of the other schemes mentioned in this blog, this is a grant so it doesn’t need to be paid back – although the money you receive will be taxable.
The biggest change is that this grant is now open to newly self-employed individuals, providing that you submitted a 19/20 tax return before the deadline. Previously, the scheme was only open to people who had started their self-employment before April 2019, which meant that many new freelancers couldn’t access any support. So it’s great news that these people can now get help if they need it.
To claim the 4th and 5th SEISS grants, you need to:
- Be self-employed or a member of a partnership (a business partnership, not a romantic one!)
- Have trading profits of under £50,000
- Your non-trading profit (including any income from PAYE work) cannot be more than your trading profit
- Have traded in 19/20 and 20/21
- Have submitted your 19/20 tax return by the deadline
- Be currently trading but experiencing reduced demand due to coronavirus, or be temporarily unable to trade due to coronavirus
- Intend to continue to trade in the future
- You think you will see reduced profits due to coronavirus
Your eligibility will be worked out based on your 19/20 tax return in the first instance, but if you are not eligible then the scheme will look at your previous tax years. Find out more about eligibility for the scheme on the government website.
Remember to only claim on this scheme if your business has been affected by coronavirus. We’d also recommend trying to save evidence if you can of how the coronavirus crisis has affected your earnings or work – this could include, for example, an email from a client saying they don’t have any work available at the moment due to lockdown. The government also announced in the March budget that they would be investing £100 million in a new ‘Taxpayer Protection Taskforce’ to ‘crack-down on COVID fraudsters who have exploited UK Government support schemes’, so it would be sensible to keep a log of evidence that proves your claim is a legitimate one.
In line with the help for the self-employed, it was also announced that the Coronavirus Job Retention scheme – where companies can place workers on full-time or flexible furlough and claim back up to 80% of their wages – will also be extended to September 2021. People who are registered self-employed as a sole trader can’t claim this, but if you are a freelancer working through your own limited company, also known as a personal services company (PSC), you may be eligible. However, most people who work this way pay themselves a basic salary for tax purposes, so would probably not qualify for a lot of money under the scheme.
Recovery Loan Scheme
This is another scheme that is only open to registered businesses, but if you’re working through a limited company it may be something that you can use to get your business back on its feet as the economy starts to reopen. Repayable loans of £25,001 to up to £10 million are available depending on the size of your business, and can be used for any legitimate business purpose. You can find out more about the loans, the process of applying for one and the criteria you need to meet on the government website.
Flexible cover for freelancers
While we all look hopefully to the government’s road map for reopening, these are still challenging times for freelancers. If your business continues to be affected by coronavirus, hopefully there is a scheme in here that you can benefit from. Another way you can support your financial position as a freelancer is by taking out business insurance with Dinghy. We offer policies tailored specifically to the needs of freelancers that will protect you from the financial risk of legal action against your business if you are accused of making a mistake or cause an accident in the course of your work. Our policies are fully flexible so you can put them on pause when you’re not working, helping to save you money when your income is lower. We don’t charge any fees or admin charges, and you can pay monthly at no extra cost. Head to our website to see how you can get fairer, lower-cost, flexible business insurance in just a few clicks.