We have received lots of questions about what the government is doing to help the self‑employed in the creative industries.
There has been a lot of online noise and confusion about the support being offered by the Government after Thursday’s announcement.
There is also a lot of misinformation going around and as we are a sector made up of a significant number of self-employed humans, we thought a clear and concise Q & A might
This blog is brought to you by the absolute dream team:
Jacqui Hutchinson, Accountant extraordinaire
Dean Hutchinson, Business Guru and master of the mind, and,
Sam Dunstan, Theatre Director and Producer.
We’ve aimed to cover as many people’s questions as possible, but if your question isn’t covered here then feel free to comment below or get in touch with one of us.
Am I entitled to claim any money under the self-employment income support scheme?
Anyone who fits ALL of the following criteria is entitled to claim:
- You must be registered as self-employed with HMRC.
- You must have submitted a 2018-19 tax return.
- Over 50% of your income must have come from Self-employed work.
- You must have trading profits of LESS than £50,000 from their self-employed work in the last tax year (2018-19). More detail on this further down. If your trading profit is OVER £50,000 for 2018-19 you may still be eligible if your average trading profits over the last 3 years are LESS than £50,000.
How much can I claim?
You will be entitled to 80% of an average of your trading profits submitted on your tax returns for 2016-17, 2017-18 and 2018-19. If you started trading between 2016-19 HMRC will only use those years you filed a Self-Assessment Tax Return.
For example, if you completed a Self-Assessment for 2017-18 and 2018-19, they will use the average of the two years.
This is capped at a maximum of £2500 per month.
You will receive this payment as a lump sum to cover expenses from 1st March 2020 to 31st May 2020.
If it appears the emergency measures will remain in force after 31 May then additional payments will be made on a monthly basis to the same amount.
2016-17 you made trading profits of £4,000
2017-18 you made trading profits of £5,000
2018-19 you made trading profits of £6,000
Average: £15,000 / 3 years = £5000 per year
£5000 / 12 = £416.66 per calendar month (pcm)
80% of £416.66 = £333.33
You are entitled to £333.33 per month from the Government.
When will I receive my payment?
Payments will be issued in at the start of June 2020 to cover the period March-May.
In the example above you would receive £999.99 in June and £333.33 each month thereafter, until we are out of the current crisis.
What if I wasn’t Self-Employed 2016-17, but was from April 2018 onwards?
Your entitled amount will be based on trading profits from 2018-19 tax return.
What if less than 50% of my income is from Self-Employed work?
Then I’m afraid you are not eligible for this scheme.
What if 2018-19 was my first tax year? Do I qualify?
Yes, providing you meet the eligibility criteria detailed in the first question.
What if I haven’t been Self-Employed for a full year?
According to Robert Jenrick MP, secretary of state for Housing, Communities and Local Government, who was on BBC Question Time the day of the announcement if you have less than 1 year’s accounts then you should contact HMRC; Give them what you have got; and the government will try their best to help you (they have emphasized TRY, but make no guarantees). Otherwise the Government are encouraging you to apply for Universal Credit.
Do I have to repay the money?
You do not have to repay it, but it is taxable and will need to be declared on your tax return for 2020-21.
What are ‘Trading Profits’?
At the moment the Government’s definition of Trading Profits isn’t clear. General consensus among the accounting industry is that it will be the NET Profit:
Income – Expenses = Trading Profit
Does my Personal Allowance factor into the calculation of my Trading Profit?
No. Allowance is a completely separate thing.
If my Tax Returns have only recorded losses (no profit), am I still eligible?
No. 50% of your income must come from Self-Employed work. If you have made a loss, then this won’t be the case.
How will I know if I am eligible? How do I apply?
Using your data from HMRC, the Government will contact you directly if you are eligible. If you are not contacted but think you might be eligible you need to contact HMRC directly, but please wait for more information over the next few days before you do this.
Will they take my 2019-20 tax return into account?
No, however it is strongly recommended that you submit your tax return as soon as you can. The current financial year finishes on 5th April 2020.
If you have employment income as well (FOH, Bar job, Reception work) you should receive P60s from your PAYE jobs by 19th April and can therefore submit your tax return from that date forward.
I am late filing my Tax Return for 2018-19, does this mean I can’t apply?
The Government have granted another 4-weeks for people to submit late returns. The deadline for this is 23rd April 2020.
I’ve applied for Universal Credit; will that affect how much I might get?
No. The amount you are eligible for is purely based on the mean of your trading profits from your available tax returns.
I work several Zero-Hours jobs as a PAYE worker to subsidise being a freelance creative – What do I do?!
This question has come up a lot in various forms.
If you’re paid through a payroll, even if it was on a zero-hours basis, you could be eligible for help as a furloughed employee through the Job Retention Scheme. If you were on payroll with an employer at 28th February 2020 you are eligible. You should identify your employment status with each employer.
If you are considered ‘furloughed’ your employer will be able to reclaim 80% of your wages from the Government.
Zero-hours contracts will be paid 80% of the higher of pay received in the same month last year or an average of the monthly pay over the last year. This is where it gets complicated so we will use an example:
You work Front of House at a West End Theatre around being an actor. 50% of your income is from being a Self-Employed actor and 50% comes from this job. You have been working at this theatre since January 2019. You have a Zero hours’ contract paid at £10 per hour.
Your employer notifies you that you are being ‘furloughed’ from the 15th March 2020. Your average monthly pay will be worked out as the HIGHER of one these two scenarios:
- Your monthly income from March 2019. In this example, you worked 20 hours in March 2019 so you would have earned £200.
- Your average monthly earnings from this job from the 2019-20 tax year. On your February payslip you will have all your pay to date from this Tax year. Take that amount and divide it by 11 months.
In this example, your average is £250.
The £250 per month is the higher amount. 80% of £250 = £200pcm. This pay will be subject to the usual deductions such as National Insurance and Tax.
This will be the case for each job you have with each employer. They will do this calculation for you and let you know how much net pay you will receive.
If your PAYE employers haven’t contacted you already then we recommend sending them an email and asking them if they will be making you furloughed and, if they are, when you can you expect some news about potential payments.
You can receive payments from both this scheme AND the Self-Employed payment help.
What if I have been employed less than a year?
Employers can still claim for your wages. They will instead claim for an average of your monthly earnings since you started work.
What if I was hired by an employer AFTER the 28th February 2020?
If you were hired after the 28th February you cannot be furloughed, and therefore are not entitled to pay from your employer.
While I wait for this money to come through, can I supplement my income with a separate PAYE job?
Yes. Current PAYE work will not affect this payment. However, it will affect your Universal Credit entitlement if you are also thinking of applying for that.
What is the application process going to be?
At this stage we aren’t sure, probably because the Government are still developing it. The Chancellor did mention that it would be through application form and that those who are eligible will be notified through the contact information HMRC have for you.
I’ve changed my email address/phone number/address since I submitted my last Tax Return.
Update your details through your government gateway account immediately.
How do I survive until June?
The government are encouraging people to sign up to Universal Credit. We have included some other links at the bottom of this article that you may find useful.
The HMRC website is a confusing mess! How do I check my profits for the last 3 years?
If you submitted your own Tax Return: you need to login through your Government Gateway account to check, which is here.
If a third party (ie, your accountant) submitted your tax return: the figures won’t be visible on your gateway so you will need to get in touch with them.
I live with my partner who is still working, am I still eligible for this scheme?
Yes, providing you meet the criteria detailed in the first question. If you are also going to apply for Universal Credit, it may affect this.
I am the sole director and shareholder of a limited company; I receive a salary and dividends, what can I claim?
Directors in this situation can be placed on furlough just like any other employee and the Company will receive 80% of the salary (upto £2,500 per month).
In respect of dividends it is very unlikely that any provision will be made.
Any business that is eligible for small business rates relief can make a claim to their local authority for a grant. If you fit this criterion you should contact the local authority directly to learn how to make the application, though most are doing this online. Please note you need to have business premises to claim this. You cannot claim this if you have a registered company and work from home.
I am a non-UK national registered as self-employed with a UTR number. Am I eligible?
Yes, providing you meet the above criteria detailed in the first question.
I work for an Agency on a freelance basis, so I’m not ‘employed’ as such. Can I apply for this Self-Employed scheme?
Similarly, to those on 0-hours contracts with other employers, you can be furloughed and receive an average of your income as payment. Unless 50% of your income comes from Self-Employed work you cannot apply for this scheme.
What additional support is available?
Support and payment amnesties are being announced all the time, but currently this is what is available:
Hardship Fund: Apply for this through your local council.
Council Tax: Some local authorities are offering a payment holiday on Council Tax for the next 3-months. You need to check your local council’s website for more information.
Universal Credit: This is the system the Government is encouraging everyone else to sign-up to, though waiting periods have been long so expect it to be awhile before you will get to speak to someone.
HSBC Overdraft: If you bank with HSBC, they have increased the interest free buffer on overdrafts from £25 to £300 for 3-months. Other banks may have similar offers; you should contact your bank directly to find out how they might help you.
Credit Card & Utility Companies: Payment holidays and similar arrangements are being put in place by various businesses, you should check with your providers how they are helping customers over this period.
Contactless: The card limit for contactless has been increased from £30 to £45.