Covid cash, continued
THE UK government is winding down financial support for people affected by covid-19. While reported cases continue to rise in September, it is clear that the government's current intention is that we are on our own. NUJ members see here for details of the Union's charity NUJ Extra.
The following is our best effort at a running summary of what support is still available to freelances whose income is affected by covid-19.
If you spot something missing, please email firstname.lastname@example.org 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.
Applications are now closed.
The good news was:
- Established freelances can apply for grants from the Self-Employment Income Support Scheme (SEISS);
- You can claim up to 80 per cent of your qualifying profit for May, June and July 2021 (but see below);
- Applications opened for all in late July and the deadline to claim was 30 September 2021;
- Tax returns for 2019/20 will be used to calculate your qualifying profit. So at least some of the ForgottenFreelances who were excluded because they had only recently become self-employed will be eligible. This will apply to those who filed a return before midnight on 2 March 2021;
- If you are not eligible on the basis of your 2019/20 tax return you can still claim based on your 2016/17, 2017/18 and 2018/19 returns;
- You do not have to stop working; and
- You can claim whether or not you claimed earlier "slices".
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 bad news includes:
- If you have not traded in both the tax years 2019/20 and 2020/21 you get no grant;
- If you only have a few months' self-employment on your 2019/20 return, this income will be counted as your profit for the whole year and your assessed average income will therefore be stupidly low;
- Grants will be available only to people who got more than half their income from freelancing - the advice changed on 6 July to say that you must have had "trading profits at least equal to your non-trading income". If 51 per cent of your income came from shifts paid Pay As You Earn (PAYE), for example, and 49 per cent from pure freelancing, you will get no SEISS grant;
- Only people whose turnover has fallen by 30 per cent or more will receive 80 per cent of their qualifying profit; those whose turnover has fallen by less will receive 30 per cent, capped at £2850 - see HMRC advice on working out your turnover;
- The conditions for receiving this SEISS slice are 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;
- have carried on a trade in the tax years 2018-19 and 2019-20;
- intend to keep trading in the tax year 2020-21; and
- declare that you "reasonably believe there will be a significant reduction in your trading profits due to the impact of covid-19 between 1 May 2021 and 30 September 2021". See below keeping evidence to back this up.
- No grant at all will be paid to anyone with an average trading "profit" over £50,000;
- The payment for May to July is capped at £7500; and
- Any grants you receive will be counted as taxable income.
There is an eligibility checker on the gov.uk website: you need your 10-digit tax reference number and your National Insurance number.
In order to apply you will need to have a Government Gateway user ID and password. You can check that yours works - or apply for one - at www.gov.uk/log-in-register-hmrc-online-services
You should keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected. Government 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; or
- a record of dates where you had reduced demand or capacity due to government restrictions.
There is also guidance on records you need if you have had to cease trading for a period as a result, for example, of an instruction to you or your child to self-isolate.
Freelances should already have such records to hand. Don't panic.
The NUJ has been active in lobbying, with associated unions, for fair treatment of those excluded from these payments, as part of the #ForgottenFreelances campaign. At least some of those who were excluded because they have recently become freelance are now covered by SEISS. But we see no shift on those excluded because they were paid PAYE or were forced to operate as limited companies. This is despite many Members of Parliament speaking out in the debate on the March Budget.
It still 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 includes this:
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...
Local support for businesses
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.
For Scotland, start by investigating Additional funding for business affected by temporary restrictions; for Wales Financial Support and Grants; and for Northern Ireland the Localised Restrictions Support Scheme (from nibusinessinfo.co.uk).
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.
The scheme runs to the end of September 2021. The Trades Union Congress and business organisations are pressing for an extension.
Employers (and clients of PAYE freelances) now have to pay 20 per cent of a worker's usual pay towards the hours they do not work in August and September.
Employers may furlough workers who were in the PAYE system on 2 March 2021.
There have been provisions for employers to re-engage and then furlough workers on fixed-term contracts and to claim for employees who transferred from their old employer to a new employer. We're still looking for updates on these.
Employers need to claim for August 2021 by 14 September 2021, and so on.
The NUJ's Freelance Office can offer NUJ members 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.
Since May 2021 the BBC Coronavirus update for Freelancers has referred only to "wellbeing support" and to the possibility of applying to the BBC Benevolent Fund (for which we have found no contact details) or the Grace Wyndham Goldie (BBC) Trust Fund - the deadline for which is 31 July each year, with grants arriving in September or October.
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 - but support payments will be based 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 2020 specifies that you (director) must agree in writing with you (employee) that you are on furlough.
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 can claim £500. You claim from your local authority. This now applies to those told to self-isolate by the "NHS" Test and Trace App (after registering with Test and Trace) as well as to those told by human tracers working for Serco.
You have to meet 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, or you are the parent or guardian of a young person in the same household who is self-isolating.
You will need to show evidence when you apply:
- Your National Insurance number;
- A notification from Test and Trace (or the app) 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.
If you do not meet all the above conditions, discretionary grants may be available from your local council.
Please contact the Freelance if your local authority application system does not work.
The following link also describes discretionary payments from local councils.
In Scotland, the Aberdeen Evening Express reported on 12 January that only one application in four under the equivalent scheme was approved in October and November. The Liverpool Echo on 11 January reported the same figure for the English city.
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.
5. Loans, mortgages and rent
A Recovery Loans scheme was launched on 6 April 2021. It turns out to include four kinds of finance:
- Term loans between £25,001 and £10 million per business, repayable over up to six years;
- Overdrafts between £25,001 and £10 million per business, repayable over up to three years;
- Asset finance between £1000 and £10 million per business, repayable over up to six years; and
- Invoice finance between £1000 and £10 million per business, repayable over up to three years.
The conditions are that your business is trading in the UK and:
- is viable or would be viable were it not for the pandemic;
- has been impacted by the coronavirus pandemic; and
- is not in "collective insolvency proceedings".
The government will guarantee 80 per cent of these loans, with the lending institution bearing the rest of the risk. No personal guarantees will be taken on loans up to £250,000.
See the British Business Bank for a list of 23 lenders.
At launch on 6 April 2021 NatWest was offering interest rates ranging from 7.33 per cent for one-year loans to 9.90 per cent for six-year loans and RBS was offering the same rates. On 6 September 2021 these rates had fallen to 6.16 per cent for one-year loans and 7.06 per cent for six-year loans.
At launch, and still on 5 September 2021, meanwhile, HSBC was offering 4.49 per cent for loans up to and including 3 years and 4.99 per cent for all loans over 3 years. Most others do not publicise rates up front on their websites.
So do shop around, do check current offers and do take qualified financial advice before taking out a loan.
Government small business "bounce back loans" could be used to support your income. Applications for these closed at the end of March 2021, as did those for a Business Interruption Loan Scheme.
For the record, bounce-back loans were for amounts between £2000 and £50,000. They were 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 could take payment holidays on these loans, or periods when you pay only the interest, of up to six months.
Loan payment deferral
Lenders must offer ominously-named "tailored help" - see, again, excellent MoneySavingExpert.com advice. The statutory payment holiday provisons expired at the end of March 2021.
Those who rent can ask their landlord to discuss deferral.
Tenants in England must now generally receive at least four months' warning before court proceedings to evict them from the property start; in Scotland and Wales six months; and 12 weeks in Northern Ireland. There are exceptions for anti-social behaviour.
Housing charity Shelter said in June 2020 that the government must change the law to prevent a "tidal wave of homelessness". This remains true, the Freelance believes.
On 15 July the Welsh government opened a Tenancy Hardship Grant for private rented sector tenants. Those who do not receive Housing Benefit or Universal Credit housing payments and have built up 8 weeks or more of rent arrears between 1 March 2020 and 30 June 2021, due to covid, can apply to their local authority. The Freelance commends this step to the other nations, though we do note that it coincided with the end of a ban on evictions. The Scottish government offers interest-free Tenant Hardship Loans.
6. Universal Credit and other benefits
It may be worth trying to claim Statutory Sick Pay (SSP) at £96.35 a week, a generous increase of £0.50p a week, effective from 06/04/21. For what it's worth, it is now payable from the first day that you need to self-isolate, for up to 28 weeks. If you qualify as a "worker" your client may be able to claim back some SSP paid to you.
Everyone left out by the measures reported above - and who does not already claim another benefit - can apply for Universal Credit (UC). There are massive backlogs in the UC system - one that the Freelance believes was designed in the first place to deter and delay claims.
The UK government appears determined to end the £20 uplift to Universal Credit from the end of September. A vote on this due in the House of Commons on Wednesday 8 September reportedly cannot block the move. Claimants' payments will reduce between 13 October and 12 November.
12 September 2021: The government cancelled the Opposition Day debate on the Universal Credit cut that was due on Wednesday 8 September. We waited for an announcement that MPs would have be allowed to debate it. The Labour Party has issued a statement demanding that the cut be cancelled. That says that the party will force a vote on Wednesday 15 September - but if it happens it will be purely symbolic. Cancelling the cut would require legislation.
16 September 2021: The Opposition Day Debate was held yesterday and the motion "That this House calls on the Government to cancel its planned cut to Universal Credit..." passed 253 to 0. As noted, it has no legal effect. Dame Angela Eagle (Lab, Wallasey) asked the Speaker: "is it not a disgrace that the Government have developed this habit of abstaining completely from Opposition day votes because they do not have the guts to oppose in the Lobby the things that we suggest?" On 16 September it was reported that Olivier De Schutter, the United Nations rapporteur on extreme poverty, had written to the UK government pointing out that the Universal Credit cut is incompatible with Britain's obligation to protect its citizens' rights to an adequate standard of living.
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 pointed out on 3 June 2020 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 £411.51 for a single person over 25 - and more if you have children, have a disability or "need help paying your rent". (The single-person rate was increased in April 2021 from £409.89 - a princely £1.62 per month uplift.)
In response to coronavirus and pressure from trades unions, the government waived the "minimum income floor" (MIF) - the level of monthly earnings that UC simply assumed.
The Mirror reported on 4 March 2021 that "work coaches will get 'discretion' not to apply [the minimum income floor] if they feel someone is still hit by Covid."
Indeed, regulations coming into effect on 31 July 2021 provide that, until 31 July 2022:
(3) The Secretary of State may continue to apply the MIF easement... but only if it appears that the trade, profession or vocation carried on by the claimant remains adversely affected by the outbreak of coronavirus disease, and not for more than two consecutive assessment periods on a single occasion and not for more than six assessment periods in total.
(4) The Secretary of State may, if satisfied that economic conditions have sufficiently improved, determine that the MIF easement is no longer to apply to any claimant.
An "assessment period" is currently defined as one month. These regulations appear to give the Minister complete discretion to change the rules whenever she wishes. She of course delegates her power to "apply the MIF easement" to UC officials.
Only those who have illnesses or disabilities that affect their ability to work can get ("old style") Employment and Support Allowance (ESA). This is £74.35 a week for the over-25s.
You may be able to claim New Style Employment and Support Allowance with, or instead of, Universal Credit, depending on your National Insurance record. This is available for those who are ill or have a health condition or disability that limits their ability to work. You can also apply for New Style ESA if you cannot work while you are self-isolating because of coronavirus (covid-19) and you are not currently getting Statutory Sick Pay.
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 may still be operating 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.
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.