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COVID-19 tax relief for small businesses & self-employed people: Everything you need to know

July 7, 2021

We're wary of adding another coronavirus-related article to your feed, but as the world temporarily transforms, it's useful to know how the UK tax system is adapting and what that might mean for you as a small business owner or self-employed person.

The situation is obviously fast-moving, so always consult for the latest updates but here's what we know so far...

Newly available options to help with cashflow for small businesses

– Business loans: If you bank with one of the banks on this list, go ahead and chat to them as they've been allocated money to help small businesses struggling during lockdown. If your bank's not on there, pick another one from the list to see what level of loan support you may be able to access. As always, you'll need a business plan to support any applications.

– Extensions on time to pay: All companies will get an automatic VAT payment deferral from now until the end of June 2020. This will not be payable until 2021. You can also speak to HMRC about other tax payment deferrals on their dedicated helpline if required.

– Job retention scheme: Where you have employees who cannot work, you can agree with them to be put on temporary leave for a minimum of 3 weeks. You might then be able to apply to HMRC to cover 80% of their salary costs. (Normal tax will be collected from the employee in this period). Care needs to be taken where the Director is the sole employee of the business, so reach out if you have any questions on this.

– Statutory sick pay compensation scheme: Where you have employees who are absent due to COVID-19, the government will support with up to two weeks payment of sick pay.

– Business rates: If you qualify for any business rates relief (tax on the occupation of your non-domestic property), your local council will be in touch with you to arrange this.

Things of note for the self employed

– Deferral of income tax: There is now an automatic deferral of payments on account until 31 July 2020 and 31 January 2021. This means that if you had any upcoming tax payments based on your self assessment bill last year, you don't have to worry about paying them now until July.

– Self-employed income support scheme: For self-employed people with trading profits up to £50,000 where a tax return has been filed in the last 3 years, the HMRC will issue a grant based on the average of the last 3 returns. If you've only submitted one or two returns, it will be based on the average of those returns. A 4-week extension has been granted to allow self employed people who still need to file their tax return to be considered for the scheme. Grant payments will be issued in June.

– Universal Credit: If you don't fall into any of the above categories and have lost work due to COVID-19, it's recommended that you apply for UC: a monthly payment from the Government to help you get by with living costs if you're currently out of work.

This will be a challenging and difficult time, and as always, Ember is hard at work to help you manage your finances in the simplest, most affordable and understandable way.

We're here to help however we can

Reach out to us today if you need help understanding whether you qualify for any of the available relief schemes that the UK government is providing during the coronavirus pandemic.

Daniel Hogan

Daniel is a Deloitte-trained, fully qualified Chartered Accountant with experience in the finance software space. It was during his tenure managing a finance system in the UK that he grew dissatisfied with the lack of synergy and automation in the space, compelling him to co-found Ember.