Covid cash, continued
THE following is our best effort at a running summary of what support is 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.
The good news is:
- Established freelances can apply for grants from the Self-Employment Income Support Scheme (SEISS);
- You can claim 80 per cent of your qualifying profit for November 2020, December 2020 and January 2021;
- The deadline to claim this is 29 January 2021;
- 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"; 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 and second rounds.
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 third SEISS payment 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 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 third slice is between 1 November 2020 and 29 January 2021)";
- intend to continue to carry on a trade in the tax year 2020-21; and
- (new for this third payment): 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 (see below).
- 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 £7500; and
- Any grants you receive will be counted as taxable income.
Things still to be clarified include:
- We have no details at all of the promised fourth slice, to cover February, March and April. We endorse the concerns that Martin Lewis of moneysavingexpert.com expresses here;
- Martin Lewis of moneysavingexpert.com on 22 January reported that the details of this fourth grant will not be announced until the UK government's Spring Budget on 3 March. He described this as "cruel".
There is an eligibility checker on the gov.uk website: you need your 10-digit tax reference number and your National Insurance number.
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. There's still no change, and the Union still keeps trying.
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 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 currently runs to the end of April 2021.
Employers may furlough workers who were in the PAYE system on or before 19 March 2020. They can re-engage and then furlough workers on fixed-term contracts that expired after 23 September 2020. 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.
We believe that employers need to claim for January by 14 February 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.
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 22 January the BBC Coronavirus update for Freelancers referred only to "wellbeing support" and to the possibility of applying to the BBC Benevolent Fund or the BBC Benevolent Fund.
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 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 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 - either for 10 days because you've tested positive, or for 14 days because you are the close contact of a positive case.
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 these 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.
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.
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 March 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 March 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.
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). Regulations that came into force on 11 January 2021 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 behaviour 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. 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 pointed out on 3 June 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. That assumption 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.