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Winter government support for small businesses and the self-employed

As winter approaches, the coronavirus doesn’t seem to be going away. To help small businesses cope through the winter months, the UK government has announced new schemes, deferrals, and grants in their Winter Economy Plan.

Winter government support for UK small businesses and self-employed title image

This is a difficult time for everyone, including businesses and self-employed people. Due to the pandemic, you may experience reduced activity in the coming months.

In this article, I will discuss the different efforts brought in by the UK government, the eligibility for these schemes, and how to apply for support.

Self-Employed Income Support Scheme (SEISS)

If you are self-employed or in a partnership, your business may have been eligible for the Self-Employed Income Support Scheme (SEISS). This scheme helped self-employed individuals whose business was negatively affected by the pandemic receive a grant from the government amounting to 80% of their average business profit.

If you were eligible for the grant, HMRC would have contacted you directly back in May. If you made a claim earlier this year, the government has decided to extend the SEISS grant until the end of April 2021. If you are currently eligible but did not previously make a claim, HMRC will contact you.

SEISS eligibility

To be eligible for the Self-Employed Income Support Scheme, you must meet the following conditions:

  • Be self-employed, including if you are in a partnership
  • Currently trading and intend to continue trading in the coming months
  • Be impacted by the pandemic during the ‘qualifying period’ which is November 1st until the date of the claim

How to make a claim on the SEISS

If you were previously or currently eligible for the Self-Employed Income Support Scheme, HMRC will contact you directly.

The extension grants will be paid in 2 lump sums, each covering 20% of the average profit over 3 months.

As this is a newly introduced plan, HMRC will contact you in the coming weeks if you qualify and advise you on how to make a claim.

Self Assessment bill extension

If you owe money from your Self Assessment return, the government has announced a 12-month extension on the due date.

Earlier this year, the June 2020 due date was extended to January 2021. Now, the government has extended the deadline by another year to January 2022. There are no late fees incurred for the extension.

You will not need to apply for the extension, it will automatically reflect on your HMRC account.

Hospitality and tourism VAT reduction

Earlier in the year, the government cut the VAT rate for the businesses most affected by the pandemic. This included hospitality and tourism businesses who are now paying 5% VAT rather than the standard 20%.

The reduction was due to expire mid January, however, the government has extended it until March 31st, 2021. You do not need to apply, as long as you are an eligible business, you can continue reporting 5%.

VAT deferral - New payment scheme

Earlier this year, the government gave businesses the option of deferring their VAT payments to a later date up to March 2021.

The winter economy plan has included a ‘New Payment Scheme’ which will allow businesses who deferred their VAT payments to instead spread the payments over the 2021-2022 financial year.

Instead of having to pay your VAT bill in full by March 2021, this allows businesses to make smaller repayments with no late fees over a longer period of time.

Businesses will need to opt in to this new scheme, which will be possible from your HMRC account in early 2021.

Bounce back loan flexibility - Pay as you grow

More than one million businesses took part in the Bounce Back Loan Scheme earlier this year. This scheme allowed small and medium-sized businesses to access loans of up to 25% of their turnover, with a repayment period of 6 years and no payments for the first year.

In the winter economy statement, the government has announced a ‘Pay as you Grow’ scheme to allow even more flexibility for these loans.

The repayment terms have now been extended from 6 to 10 years which will make monthly repayments much lower. The government pointed out that payment holidays and interest-only periods will also be available if needed.

The ‘Pay as you Grow’ scheme is not automatic - If you wish to take advantage of the extension, you should speak directly with your lender.

Job Support Scheme (JSS)

The Job Support Scheme will be replacing the Coronavirus Job Retention Scheme on November 1st 2020. The previous scheme helped pay for employees on furlough. The new scheme, however, provides grants for employees who are working part-time, at least 33% of their normal working hours.

The government provides a grant of one-third of the hours not worked, and the employer matches it, as well as pays for the hours that the employee did work.

Since this is a brand new scheme with new eligibility requirements, we have created an entire article about it on our blog: ‘New Job Support Scheme in the UK’.

Summary - Winter coronavirus support

The new changes were brought in to further help affected businesses throughout the winter months. If you want to learn more about the original schemes, you can view our previous blog: ‘COVID-19 Government aid for UK small businesses and freelancers’.

The Winter Economy Plan was introduced on September 24th and the government will continue to release more detailed information in due course. For the most up to date information, I would suggest speaking to an accountant or going to the UK Government website.

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