We are going to focus on the announcement for the self-employed yesterday but first want to clarify; before we are inundated with queries; this does not apply those clients who have a limited company. These measures are aimed at those who act as a sole trader or as a partnership. There are no known further announcements planned with limited companies but naturally things are moving quite fast so that could change.
So let’s summarise the key points:
- The scheme will allow you claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months; though this may be extended.
- There are certain conditions; that must be met if you are to apply, which can be found here.
- To work out the average, HMRC will take 80% of the average profits across the 2016-17, 2017-18 and 2018-19 tax years.
- The grant awarded will be paid directly into your bank account in one instalment.
- You cannot yet apply for this scheme and instead HMRC will contact you by the beginning of June to apply online so do not yet contact HMRC.
As with all other recent announcements there will be a lot more detail to follow over the next week or so, so watch out for further updates from ourselves.
MAJOR Government Backed Loans Update
As we highlighted the varying approaches being adopted by the banks yesterday; we weren’t overly happy with this inconsistency of the ethics by which some banks might send you down a lending route where they would earn money from factors outside of your control rather than giving you the interest-free option also.
Thankfully we already have invested in a software company that has a lending platform that both encompasses the Government-backed interest-free loan options whilst also includes the normal commercial market and just today agreed our approach to this with them.
We have discussed with a number of you already the option of going down this route and mentioned it in previous newsletters but you must consider; at least, but not only, the following:
- Can you afford to service the debt beyond the interest-free 12 month term; subject to getting access to the Government-backed loan?
- What are the costs of taking on the debt beyond the initial interest-free term as over a longer period, a commercial loan might actually work out cheaper?
- What information have you got behind this application to give lenders the peace of mind that this investment in you and your business is a worthwhile one?
- What have you already done to mitigate the damage done/likely to be done as a result of the current challenges that we face?
Don’t forget, this option is not just open to limited companies but is also open to sole traders, partnerships and many more.
We can, and are, helping clients with such applications so please contact us if this is of interest to you.
We have also seen clients already go down this path completely independently and that too is fine but please factor in the considerations in the bullet points above. There are also several other factors as the scary fact is that more often than not we spend less time searching for finance than we do booking a holiday and often rely on Google’s listing which can be led by those that pay the most to advertise.
For those that do this independently, can we just kindly repeat our ask from yesterday that if you are being asked for information that you already have/have had access to can you please ensure that you have this ready rather than ask us to supply this again.