updated 05/11/20 - twice and 14/11/20 and 23/11/20 and 30/11/20 and 04/12/20 and 17/12/20 and 11/01/21 and 22/01/21
Covid cash, continued
THE UK GOVERNMENT has changed its mind about the help it makes available to workers affected by the covid-19 pandemic at least three times in the last week of October. In the summer the Treasury regularly announced rewrites of the rules at 5pm on Fridays: in the autumn we get Tweets from Ministers which may be followed by actual rules.
So the following is our best effort at a running summary of what's available to freelances. If you spot something missing, please email email@example.com now. First, follow these links:
- If you're a traditional freelance
- If your work is paid PAYE
- If you have a limited company
- If you are asked to self-isolate
- Loans, mortgages and rent
- Universal Credit and other benefits
- Community support and more
- Outside the UK?
1. If you’re a traditional freelance
A "traditional freelance" is our attempt at shorthand for someone who strives to make a living by selling work, or licences to use work, by the word, by the image, by the hour, by the day or similarly. For these purposes it does not include people who are paid through the Pay As You Earn (PAYE) system - see below.
The good news is:
- Established freelances can apply for grants from the Self-Employment Income Support Scheme (SEISS);
- On 2 November the government announced that the amount for November will be 80 per cent of the average "profit" you declared to Her Majesty's Revenue and Customs (HMRC) over the past three years, if you have been freelance that long;
- On 5 November the government announced that you will get 80 per cent of your qualifying profit for December and for January as well as November (an increase on the 40 per cent of your profit previously offered for those months);
- The deadline to claim this is 29 January 2021. We have no details of the fourth slice, and endorse the concerns that Martin Lewis of moneysavingexpert.com expresses here;
- Payments are independent of the amount of your actual loss. You do not have to stop working;
- You can claim whether or not you claimed earlier "slices";
- HMRC may inform you of the earliest date on which you could claim. Claims for the second slice closed on Monday 19 October and those for the third opened on Monday 30 November; and
- Separately, self-assessment taxpayers will also be given more time to pay taxes due in January 2021 but tax returns must still be filed on time though covid effects can be accepted as grounds to appeal a penalty.
In this context it seems that "profit" refers to the number in the box on your income tax return that calculates your turnover minus allowable expenses. The payments will be calculated on the basis of the same "profit" figures as were used for the first round.
The bad news includes:
- If you have not filed a self-employed tax return for the tax year 2018 to 2019 you get no grant;
- If you only have a few months' self-employment on your 2018/19 return, this income will be counted as your profit for the whole year;
- Grants will be available only to people who got more than half their income from freelancing - so if 51 per cent of your income came from shifts paid Pay As You Earn (PAYE) and 49 per cent from pure freelancing, you will get no SEISS grant;
- The conditions for receiving a second SEISS payment were that you must:
- carry on a trade the business of which has been adversely affected by reason of circumstances arising as a result of coronavirus or coronavirus disease;
- have delivered a tax return for a relevant tax year on or before 23 April 2020;
- have carried on a trade in the tax years 2018-19 and 2019-20;
- declare that you have been "impacted by reduced demand due to coronavirus in the qualifying period (the qualifying period for the grant extension is between 1 November and the date of claim)"; and
- intend to continue to carry on a trade in the tax year 2020-21...
- No grant at all will be paid to anyone with an average trading "profit" over £50,000;
- The payment for November to January is capped at
- Any grants you receive will be counted as taxable income.
Things still to be clarified include:
- The level of the second grant in the new scheme (the fourth slice).
There is an eligibility checker on the gov.uk website: you need your 10-digit tax reference number and your National Insurance number.
30 November 2020
Applications for the third SEISS slice are open. The rules have been subtly and quietly changed: you need to declare that you "reasonably believe that you will suffer a significant reduction in trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected."
The deadline for making this claim is 29 January 2021. This document states that the cap for November to January is £7500.
This guidance gives examples of records that would show that you have reduced demand:
- business accounts showing reduction in activity compared to previous years;
- records of reduced or cancelled contracts or appointments;
- fewer invoices; or
- a record of dates where you had reduced demand or capacity due to government restrictions.
Freelances should already have such records to hand. Don't panic.
Examples provided by HMRC strongly suggest a future plan to refuse grants to freelances who have not sought work outside the field of work that has been affected by coronavirus.
Back in May the Chancellor announced an extension of the furlough scheme (below) and the NUJ's General Secretary Michelle Stanistreet wrote to the Chancellor of the Exchequer calling for "urgent action over the many gaps in provision" for freelances, as part of a #ForgottenFreelances campaign.
It seems to the Freelance that the criteria for SEISS are a database query rewritten in (a kind of) English. That is, the government is not giving people what we need. It's giving us what it can decide on without human intervention. To properly pay SEISS to freelances who were forced to set up a limited company to charge for their services, for example, could involve an actual human inquiring into each case, since the government is determined that SEISS is not payable on income from stakes in other people's companies.
The NUJ has produced a template letter to HMRC to appeal against a decision that you are ineligible for the SEISS scheme due to your PAYE income. It challenges thus:
I ask HMRC to review the decision in my case that the PAYE income and tax that has been paid is not "employee" income because at no time have I been an employee or anything other than genuinely self-employed...
22 January 2021 In England, it may also be worth applying for an Additional Restrictions Grant from your local council. These are completely discretionary. Local councils have the freedom to determine the eligibility criteria. The government expects them to help businesses which - while not legally forced to close – are nonetheless severely impacted by coronavirus restrictions. As a freelance, you count as a business.
On 27 October the NUJ issued a statement on freelance support. It includes:
While we welcome the increase... from the previous 20 per cent in this deal, the self-employed support must be equal to the support the UK government is giving employees... We have raised our concerns with the TUC to take this up with the Chancellor, as well as our continuing dismay and anger that the government has failed to provide any support at all for the many PAYE self-employed individuals, those with less than 50 per cent self-assessed income, the newly self-employed, those who work via limited companies and those with self-employed profits of more than £50,000. There is still time for the government to put this right. We are also launching our new campaign for better rights and protections for freelances and calling on government and companies to stop giving so many freelances such a shabby deal.
The wish in the first sentence is now achieved, for some freelances, then...
4 December 2020
Over the past weekend the NUJ was co-signatory of a letter to the UK Chancellor telling him that failing yet again to address the gaps in financial support for freelances leaves them facing a very difficult winter. The trade unions and business organisations proposed a meeting with Rishi Sunak to discuss ways this can be resolved. The letter says:
We understand that these schemes were set up in haste and that it was difficult at the outset to broaden their scope, however these schemes are now set to run for at least a year and the continued omission of these workers is causing immeasurable hardship and huge mental health consequences for those impacted and their families.
While some of these issues present technical difficulties to resolve, solutions have been proposed to you – such as the new Directors Income Support Scheme which shows how the government can help those with income from dividends from working in their companies, as opposed to passive investment.
2. If you do regular shifts, paid PAYE
Freelances who are paid through the Pay As You Earn (PAYE) system are excluded from SEISS (above). The government guarantees that employers get 80 per cent of salaries for employees who are "furloughed", up to a maximum of £2500 a month.
On 17 December the scheme was extended to the end of April 2021. The Chancellor announced that it will continue to cover 80 per cent of pay.
On 5 November the government moved the cut-off date: employers may furlough workers who were in the PAYE system on or before 19 March 2020. (The previous cut-off was February 28 2020.) This is expected to benefit over 200,000 employees. We have reports (and a Chancellor Tweet) that the scheme is extended to March 2021, as well.
Just before 5pm on 13 November the government updated the rules. Workers on fixed-term contracts that expired after 23 September 2020 can be re-engaged and then furloughed (there was some confusion about this date: the government previously gave it wrongly as 23 October). And the same applies to employees who transferred from their old employer to a new employer ("TUPEd") on or after 1 September 2020. See updated guidance for employees, which states that workers may be furloughed if you were employed on 30 October 2020 and your employer made a PAYE filing for you between 20 March 2020 and 30 October 2020.
On 20 November the government issued deadlines for applications to furlough workers. Employers need to claim for November by 14 December 2020, for December by 14 January 2021, and so on.
The NUJ's Freelance Office can offer advice on contractual matters and cancelled work: contact details are here. They have had some success in persuading companies to apply for the funding to furlough casual workers.
Some companies may still not know that they can apply to furlough workers - not just employees. There is also provision for company office holders and for those who work through agencies. See here for the full government advice (an update was promised for the week ending 13 November).
On 31 October the Prime Minister announced that the furlough scheme would be reinstated until the end of December. Apparently the government will for this period pay the full 80 per cent of salary that furloughed employees get - so plans to make employers contribute a proportion have been cancelled. We awaited details of what this means (they're here). So, we suspected, did the Prime Minister.
In July the BBC announced that it was matching the furlough scheme - to include 649 PAYE freelances who have worked for the corporation every month for the last year but had no bookings or reduced bookings during the lockdown. The PAYE freelances affected should have received their average earnings for March, April and May (capped at £2500). The NUJ now awaits a response from the BBC about extending this scheme. On 3 November the BBC Coronavirus update for Freelancers had not been updated since 7 August.
The privatised BBC Studios showed best practice by promising to include those on fixed-term contracts and freelances paid PAYE in the furlough scheme. Other companies have not.
3. If you have a limited company
Many freelances have been forced to register themselves as limited companies, some due to clients' superstition over "IR35" rules. A few chose to do so when the tax on income taken as a dividend on their shares in their own company was very much lower than that on income taken as salary.
Self-employed limited company directors can be furloughed as employees of the company - only on their salary paid PAYE. The work they do for the company is then restricted, but they can continue to perform their statutory obligations as directors - which would include effort to claim the support for the pay they take as an employee. Earnings that they took as dividends do not count. A Treasury Directive issued on 15 April specifies that you (director) must agree in writing with you (employee) that you are on furlough.
In his online question and answer session on 22 May the Chancellor seemed to say that government databases simply couldn't cope with replacing dividend income for freelances. This strengthens our analysis that the rules are determined mostly by what the HMRC database can easily do.
4. If you are asked to self-isolate
People in England who are on low incomes and who are told to self-isolate because of covid-19 on or after Monday 28 September will be able to claim £500. You claim from your local authority.
You will have to fulfil all four of these criteria to receive the payment:
- You are currently receiving Universal Credit, Working Tax Credit, income-based Employment and Support Allowance, income-based Jobseeker's Allowance, Income Support, Housing Benefit and/or Pension Credit;
- You are employed or self-employed;
- You are unable to work from home and will lose income as a result; and
- You have been told to self-isolate by NHS Test and Trace - either for 10 days because you've tested positive, or for 14 days because you are the close contact of a positive case.
On 10 December eligibility for these grants was exended to those told to self-isolate by the "NHS" Test and Trace App.
23 November 2020
are not avilable to those told to self-isolate by thr Test and Trace App.
Discretionary grants may be available from your local council.
(We spotted this in earlier advice but it was too surreal to make it through our later edit. Sorry.)
You will need to show evidence when you apply:
- Your National Insurance number:
- A notification from Test and Trace asking you to self-isolate (including a Unique ID number);
- A bank statement;
- If you are self-employed, evidence of this: business account bank statements or copies of self-assessment returns, for example. (If you are employed you need proof of this, such as a payslip, with a contact for your employer so that it can confirm that you are unable to work from home.)
You need to apply within 14 days of the end of your isolation period.
The money should be paid into a bank account. Central Bedfordshire Council is one of those that gives necessary advice on how to get the money if your bank account is overdrawn when you apply. Some simply refer you to the Citizens' Advice Bureau.
Please contact the Freelance if your local authority application system does not work.
The following link also describes discretionary payments from local councils.
22 January 2021
Someone on 21 January leaked to the Guardian a recommendation that the £500 payment should be made to everyone who tests positive, so that all those in need can afford to self-isolate, without setting up a massive means-testing machinery. The UK government swiftly sat on the idea... but did not actually rule it out strongly enough that its implementation would count as a U-turn. A J-turn, perhaps.
If you are in England and need practical help while self-isolating, for example with getting food in, see this government page. It refers you to the NHS Volunteer Responders programme, which invites you to call 0808 196 3646 (8am to 8pm, 7 days a week). Some sources say you need to be referred to this programme: your GP or NHS 111 can do this.
- If you want to share the pain we felt while finding out how this Test and Trace Support Payments were going to work, see Payment for self-isolation - for the poorest - from September.
5. Loans, mortgages and rent
Government small business bounce back loans can be used to support your income, failing all else.
The loans are for amounts between £2000 and £50,000. They're interest- and payment-free in the first year, and at a very low 2.5 per cent fixed annual interest after that - and are repayable over ten years. Also, you will be able to take payment holidays, or periods when you pay only the interest, of up to six months.
Fourteen banks have announced plans to offer these loans - see the moneysavingexpert page for an updated list.
The deadline to apply for these loans has been extended, again, to 31 January 2021.
The Freelance would under normal circumstances advise getting professional financial advice before taking out a loan. If you have an existing loan that charges more than 2.5 per cent interest, however, that advice is likely to be "get one of these to pay that off."
All freelances who have mortgages can apply to defer payments. Doing so would of course mean increased payments later, or payments for considerably longer. You can also request payment holidays on credit cards and many types of loan, and on rent-to-own schemes (hire purchase).
The deadline to apply for a mortgage or loan payment holiday is now 31 January 2021. On 1 November an extension of mortgage relief was announced. It will allow borrowers to get a total of six months of payment holiday (including any already claimed).
Those who rent can ask their landlord to discuss deferral. As far as the Freelance can tell, landlords have been able to initiate possession (that is, eviction) proceedings since 21 September, after an extraordinary last-minute extension. Also, tenants in England, Scotland and Wales must now receive at least six months' warning before they have to leave the property (12 weeks in Northern Ireland).
11 January 2021: Regulations coming into force today state that "no person may attend at a dwelling house for the purpose of: (a) executing a writ or warrant of possession; or (b)delivering a notice of eviction" before 21 February 2021. There are exceptions for squatters, anti-social behaviout and, er, "substantial rent arrears" - of six months or more.
Housing charity Shelter said in June that the government must change the law to prevent a "tidal wave of homelessness", not just defer it to the Spring.
6. Universal Credit and other benefits
It may be worth trying to claim Statutory Sick Pay at £94.25 a week, backdatable to 13 March. For what it's worth, it is now payable from the first day that you need to self-isolate.
Everyone left out by the measures reported above - and who does not already claim another benefit - can apply for Universal Credit. The rules for this have been "relaxed" - but there are massive backlogs in a system that the Freelance believes was designed in the first place to deter and delay claims.
You can apply for both SEISS and Universal Credit. If you get SEISS it will be counted as income and your UC payments will be reduced; but it will often be worth joining the queue for both.
Warning: The BBC reports people who were receiving Working Tax Credit having it cancelled when they started an application for Universal Credit. They did not even complete that application, because they were concerned that their savings would make them ineligible. So if you receive Working Tax Credit or any other "legacy" benefit - take great care.
The government later updated this advice page to reflect this: "even if [your Universal Credit] claim is not approved it will affect your tax credits if you claim them, and may affect other benefits".
The Lord giveth and the Lord taketh away
Warning: OpenDemocracy points out today how complicated are the effects of SEISS payments on entitlement to Universal Credit. Under the "surplus earnings rules" a SEISS lump sum can entirely disqualify you for benefits in the month in which it is received.
Especially if you expect your income to be seriously reduced for some months, we strongly recommend that before you apply for SEISS you use the moneysavingexpert.com benefits calculator to check what the effect will be.
The "monthly standard allowance" for Universal Credit (UC) is £409.89 for a single person over 25 - and more if you have children, have a disability or "need help paying your rent".
In response to coronavirus and pressure from trades unions, the government continues to waive (until April 2021) the "minimum income floor" - the level of monthly earnings that UC simply assumed. It reduced what claimants in work got, and in 2012 the Commons social security advisory committee warned that imposing such conditions on working claimants would be "unworkable and unfair" during a recession.
Only those who have illnesses or disabilities that affect their ability to work can get the old Employment and Support Allowance (ESA). This is £73.10 a week for the over-25s.
The NUJ and sister unions pressed for the rules on savings affecting eligibility for Universal Credit to be relaxed for the duration. Instead, we got an accounting clarification. To quote moneysavingexpert.com again: "We've checked with Department for Work & Pensions, who confirmed that while they'd expect business savings to be in a business account, nevertheless 'if someone has money in their personal account to be used for business purposes, it won't be counted towards their capital'."
If your household has more than £6000 of savings that are NOT provably earmarked for such purposes, your UC entitlement starts to reduce. While you have £16,000, you get nothing. It would seem that, if you need to claim Universal Credit, you should simply declare the savings which are "truly personal".
7. Community support and more
Mutual aid networks are being set up at street or neighbourhood level to help with shopping, picking up prescriptions and dog walking. Operating by email, Facebook and WhatsApp, they will have the word "mutual aid" in their title. Look out for flyers coming through your door or posted in shop windows locally.
8. Outside the UK?
We continue obsessively to refresh the list of published Regulations looking for details. As we do so, we fancy we hear the scritch of quill pens as the clerks frantically try to put their masters' pronouncements into something resembling legal language.