The impact of the Coronavirus crisis has taken everyone by surprise, from the employees wondering whether they still need to go to work to the people making the decisions at the very top of Government.
Since the virus arrived in earnest all across the world, corporations and governments have been forced into arriving at decisions that none of us could have imagined as 2019 drew to a close. Each day brings new questions, and these are not always answered promptly. This has been especially true for those in self-employment, who don’t know where they stand in relation to the COVID-19 virus.
For self-employed individuals in the UK, the picture has been even less clear than for many employees of businesses. While recent weeks have seen the government promise to cover 80% of wages if companies retain their workforce, and homeowners have been promised a three-month mortgage holiday. Those who work for themselves are faced with a wait until June to see if they qualify for relief, and longer to actually be paid it.
Why has it taken so long to draw up plans for the self-employed?
Simply put, it is difficult to administer a plan for people who self-declare their income when compared with the employees of businesses, whose PAYE tax is deducted from their salary at source. The government can more readily access the details for these employees and calculate their incomes, and has a direct means by which to issue payments. Those in self-employment declare their own income, and this income can vary from week to week, calculating how much each person should be paid is trickier especially it this COVID-19 situation.
What happens to tax payments?
An initial package of tax announcements has been made, indicating that self-assessment tax bills due on the 31st of July this year will not need to be paid until the end of January 2021. Additionally, a VAT break running to the end of June means that businesses with bills falling due between now and then can breathe a little easier.
It should be noted that these announcements do not mean the payments won’t be due at all; they will be delayed. It is still essential to keep up with HMRC Mileage Rates for business journeys made before quarantine began. If self-employed business owners are struggling with any other tax payments, they are encouraged to speak to HMRC to seek a payment plan; the unprecedented circumstances at present should ensure a fair hearing.
When will the plans for self-employed workers kick in?
It is assumed that the first payments for self-employed workers will arrive towards the end of May. In the meantime, those who have been left without work are recommended to apply for Statutory Sick Pay which should be paid at a rate of £94.25 a week. It is also recommended that anyone unable to work due to the crisis apply for Universal Credit although, given the teething troubles with the benefit prior to the crisis, and the estimated half a million new claims, some new claimants are pessimistic as to when payments will be made.
In such a fast-moving situation as we are seeing at present, plans made today can be wiped away tomorrow. This COVID-19 situation is likely to see some changes before the crisis is over – so keep your eyes on the news and be prepared to ask questions going forward, especially those in self-employment.