Chancellor Rishi Sunak has announced his budget, with some important updates which affect the self-employed. We have summarised the major changes that and likely to affect you and your business in the immediate future here.
Further down this article is a list of other announcements that may affect you and your business, we will be adding more blog posts when we have further detail on these announcements.
Minimum Income Floor and Universal Credit advances
Universal Credit Minimum Income Floor suspension – The government will continue the suspension of the Minimum Income Floor (MIF) for self-employed Universal Credit claimants until the end of July 2021.
The MIF will be gradually reintroduced from August, but DWP work coaches will be given discretion to not apply it on an individual basis where they assess that claimants’ earnings continue to be affected by COVID-19 restrictions.
Universal Credit, debt deductions cap and advance repayments – From April 2021, the period over which Universal Credit advances will be recovered will increase to 24 months, while the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30% to 25% of the standard allowance.
SME growth programmes
Help to Grow: Management – The government will offer a new UK-wide management programme to upskill 30,000 SMEs in the UK over three years.
Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals.
Over 12 weeks, and 90% subsidised by government, this programme will equip SMEs with the tools to grow their businesses and thrive.
Help to Grow: Digital – The government will launch a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business.
This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
Self-Employment Income Support Scheme
(SEISS) fourth grant – To support the self-employed across the UK through the next stage of the pandemic, the government confirms that the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.
The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019- 20 Self Assessment tax return to be eligible for the fourth grant. This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019- 20.
All other eligibility criteria will remain the same as the third grant. Further details will be published in due course.
SEISS fifth grant – The government announces that there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.
People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.
The final grant can be claimed from late July. Further details will be published in due course.
- * The Furlough Scheme will be extended until September 30th, remaining at the 80% level as with previous periods.
- * Businesses will be asked to contribute to the Furlough Scheme to the order of 10% in July, then 20% in August & September.
- * The Universal Credit uplift by £20 per week has been continued for 6 months.
- * Working Tax Credit claimants will get an equivalent one off payment of £500.
- * The minimum wage will increase from April to £8.91.
- * Employers who hire a new apprentice between 1st April 2021 and 30th September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
- * ‘Rest-bite rooms’ will be available for homeless women at risk of abuse and veteran support will be available for those looking for work.
- * Restart grants will be made available to help businesses that re-open in April, with up to £6,000 available for non-essential retail. Hospitality & Leisure businesses that will not open until May will have access to grants of up to £18,000.
- * Retail, hospitality & leisure businesses will also get a 100% business rates holiday through to the end of June, with a rest of the year discount by 2/3 up to a value of £2million.
- * £700 million in funds will be available for the arts, culture & sport sectors.
- * A recovery loan scheme is available for businesses of any size. They can apply for £25k up to £10 million, open from 6th April up until the end of the year, with an 80% government guarantee to lenders.
- * Hospitality & Tourism will continue to receive a 5% reduced rate of VAT, extended to 30th September and then an interim rate of 12.5% until April next year.
There are many other sources of support and advice still available to the self-employed during this difficult period.
We have summarised this on our dedicated Covid-19 support page, which you can view here.