sole trader or partner in a partnership

Coronavirus money help for sole traders and partnerships

Financial help and benefits if you’re a sole trader or a partner in a partnership (i.e. not a limited company)

If you are self-employed or a freelancer and you haven’t set up a separate company to run your business (it’s just you) then you are called a sole trader. This guidance is for you and for anyone whose business is set up as a partnership.

There’s some good news for you. The government has created some financial support which is specifically designed for freelance sole traders and partners whose businesses have been affected by coronavirus.

We explain it all here.

Coronavirus help for sole traders

Last updated: 14 April 2020

If you haven’t read our general guide to where to find financial help during this crisis, we recommend you read that too. Some of the advice (about help to pay your mortgage/rent, bills etc) will also apply to you.

Use Lifetise Coronavirus money help app

How to get money in: Self-employed Income Support Scheme

The goverment has set up a Self-employed Income Support scheme (SIS) to help pay you if your freelance business or partnership has been impacted by coronavirus.

If you are a sole trader, or a partner in a partnership, then you may be able to get a grant from the government. You can also continue to work in your business.

Unfortunately, if you are a director of a limited company, you can’t get this grant.

How the Self-employed Income Support Scheme works

How much is the grant? If you’re self-employed, you can get 80% of your average monthly profits (calculated over the last 3 years) for 3 months, up to £2,500 a month. 

Who’s eligible for the Self-employed Income Support Scheme? You need to have made less than £50k in profits either last tax year (2018/19) or on average over the last 3 tax years (since 2016/17). So if you just happened to have a bumper year last year, you could still get it if your profits were a lot lower in the previous two years. ALSO these profits must be more than 50% of your total income (so if this is your side hustle and your main job salary pays for more than 50% of your total income, you won’t get this grant).

Traded in the last year? You must have traded in the last year (6 April 2019 to 5 April 2020), so if you closed your business before then or didn’t do any work in this past year, you won’t be eligible. Also, if you’ve permanently closed your business recently because of coronavirus, you probably won’t qualify.

How quickly can I get it? It will be paid in one lump sum and probably not until June! So if you’re struggling for money now, apply for Universal Credit or other benefits while you wait.

How do I apply? You have to wait. HMRC will get in touch with you if you’re eligible and will tell you how to apply. If you’re not sure if you’re eligible, you can call HMRC’s coronavirus business helpline ( 0800 024 1222, 8am – 4pm Mon to Fri ), but expect to wait a long time to get through.

Is it taxable? Yes, so you’ll need to declare it on your tax returns by January 2022 (worry about that when it happens).

If you’ve only recently gone freelance or become self-employed

If you haven’t traded for a full year yet, it looks as though you can’t claim the Self-employed Income Support Grant either. But it might be worth calling the HMRC business helpline to see if there’s anything they can do ( 0800 024 1222, 8am – 4pm Mon to Fri ).

Would a Coronavirus Business Interruption Loan help you? If you need cashflow, you could apply for a loan to help you. Read more here.

Need income? Check benefits. If you need money to pay your personal costs, check if you can get Universal Credit or other benefits. Check eligibility with EntitledTo’s benefits calculator.

Move your tax payments. You can defer your March – June VAT payment and your July self-assessment tax payment. Read more here.

Help with cashflow: Coronavirus Business Interruption Loan

If you operate your business through a business bank account (and not your personal account) then you could be eligible for a Coronavirus Business Interruption Loan (known as CBIL).

It’s intended to help small businesses who need help with cashflow because of coronavirus and who might not be able to persuade their bank to give them a loan. With CBIL, the government gives the banks a guarantee, so it means banks are more likely to say yes to you.

How much can I borrow? Up to £5 million either as an overdraft, loan, asset finance or invoice finance.

Do I need to give security / a personal guarantee? You shouldn’t have to give a guarantee if you’re borrowing £250,000 or less from one of the Big Four banks (HSBC, Barclays, Santander, Lloyds). If you’re borrowing more, it’s up to the lender.

Who is eligble? You must run a UK business ahd have a maximum annual turnover of £45 million. Your business must still be viable (i.e. you’re only struggling for cashflow because of coronavirus, otherwise your business would be healthy). It’s open to all types of busineses (including sole traders) provided you have a business bank account.

What are the finance terms? 3 years to repay overdrafts/invoice finance and up to 6 years to repay loans. The government should cover interest or fee payments to the lender for the first 12 months. Double check the terms – try to avoid any which charge arrangement fees or early repayment fees.

How do I get it? There are 40 approved banks and lenders and you can see them all here on the British Business Bank’s site. It might be easiest to apply to your own bank (but always check if they’re offering competitive terms). Tip: apply online, as phone lines are very busy.

Deferring your tax payments

If you have a March – June VAT payment due or a July self-assessment income tax payment, you can choose to defer them.

Deferring your March – June VAT payment
  • You can defer your payment until March 2021.
  • Submit your VAT return in the normal way.
  • You don’t need to notify HMRC about your deferal, you just don’t pay.
  • Remember – if you normally pay by direct debit, don’t forget to cancel the direct debit).
Deferring your self-assessment income tax payment on account
  • Do you have a pre-payment on account due by 31 July?
  • If so, you can defer it until January 2021
  • Again, you don’t have to notify HMRC that you’re deferring it.
  • Just don’t pay it in July.

If you’re struggling to pay any taxes, then you can always call HMRC to agree a payment plan and extra time to pay:

HMRC tax helpline: 0800 0159 559

Coronavirus money help for freelancers and self-employed
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