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Coronavirus survival basics #3: Help for the self-employed

Coronavirus help3
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The latest in the AJ’s series of practical ‘how-to’ guides looks at the help available to the self-employed and sole-practitioners

What financial aid is there for the self-employed?

Grants will be offered through the coronavirus Self-employment Income Support Scheme – eligible to those who are self-employed or a member of a partnership and who have lost income due to coronavirus.

Chancellor Rishi Sunak said the government would cover 80 per cent of the average monthly profit earned by those who are self-employed.

However, these grants are not expected to be made available until June and those facing immediate financial hardship should apply for universal credit.

This scheme is only open to: those who are already self-employed; make the majority of their money from being self-employed; have a self-assessment tax return for 2019; and whose trading profit is below £50,000.

It does not cover owner-directors of limited companies paid via dividend from the companies’ profits (see Architects warn of ‘permanent damage’ after missing out on coronavirus support).

The amounts payable by the government will be calculated on average monthly profits over the last three financial years and, as with the Coronavirus Job Retention Scheme, payments will be capped at £2,500 per month. This is initially expected to last three months.

The government has also extended the deadline – till 23 April – for anyone who has been self-employed for more than a year and hasn’t yet filed their 2019 tax return. This will ensure they are eligible for the grant.

Self-employed architects cannot yet apply for the scheme, but instead will be contacted by HMRC if they are eligible and then invited to apply online. 

If the money from the income support scheme
isn’t available until June, what can I do now?

The government has said businesses can defer VAT payments for three months. So, if you’re a UK VAT-registered business and have a payment due between 20 March and 30 June, you have the option to put that back until a later date.

If you have money put aside for tax and are due to pay a self-assessment payment on account by 31 July then, to ease cash flow, you are allowed to defer your self-assessment payments for six months until January 2021. There have also been some changes to universal credit to increase the amount available.

If you receive small business rate relief or rural rate relief as of 11 March, then you could be eligible to tap into a one-off grant of £10,000 from the coronavirus Small Business Grant Scheme. More information can be received from your local authority on this.

What if I’m ill and self-employed?

There have been changes to the self-employment allowance which would give you the equivalent to statutory sick pay. This is £94.25 per week if you’re too ill to work – available to those self-isolating because of coronavirus, from day one of sickness. For the self-employed, you can now more easily make a claim for universal credit or new style Employment and Support Allowance.

I am a director of a small practice so am excluded from
the government’s help for the self-employed. What can I do?

Many self-employed architects do not qualify for the income support scheme (see above) as it excludes owner-directors of limited companies who are paid via a dividend from the companies’ profits. This is a common way for architecture practices to be set up and it means a large number of small and medium-sized practices, as well as other creative professionals, could miss out on essential financial aid. Mark Hatter, director of London-based Hatterwan Architects, is lobbying the government over the omission which he says could result in ‘permanent damage’ to the profession.

If this is you, it might be worth signing this petition and getting in touch with the RIBA which has told the AJ it will inform the government of issues facing its members. The Creative Industries Federation has said it is seeking ‘urgent clarification’ from the treasury on the issue, while the Construction Leadership Council has already written to the prime minister asking for further consideration to be given to the position of directors of micro-businesses and consultancies.

Can practice directors of limited companies put themselves
on furlough through the government’s job retention scheme?

Owner-directors of small practices typically structure their accounts, so they receive some income through PAYE, but most of through a taxable dividend. This means directors could place themselves on furlough, but they would only receive 80 per cent of the salary they pay themselves through PAYE. Chris Hunt, of Yorkshire-based Niche Design Architects, has explained that if he took the retention scheme option, he would only receive £575.20 per month, and would also have to stop working.

I have tried everything and I’m in urgent
need of financial help. What should I do?

If your income has massively reduced or stopped, the Architects Benevolent Society (ABS) can provide grants to help with day-to-day living expenses for a period. Its financial aid is intended to complement state financial support and it is asking architects to apply for government schemes first.

The ABS’s help is available to architecture professionals – and their families – who have worked in the industry for at least a year and who its welfare team judge as being in financial need.

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Readers' comments (1)

  • Thank you for mentioning the Architects Benevolent Society - as a trustee of the charity I can vouch that the team are working hard to support architects, landscape architects, architectural technologists, architectural assistants and their families during this exceptional time. The welfare officers can answer questions about what support is available either from the ABS, or other charities, social services etc. There is lots of information on the website https://www.absnet.org.uk/ and links via twitter @ArchBenSoc

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