Many self-employed businesses are struggling for cash to support themselves and their families. Here are our top 10 cashflow tips for the self-employed including subcontractors.
TIP 1: Complete your 2018-19 tax return if you haven’t filed it already
To be able to qualify for the self-employed income support scheme you must have filed a 2018/19 tax return. If you have missed the original 31st January 2020 filing deadline you can still qualify for the support but you must file your tax return by 23rd April 2020. The scheme can provide funding as a grant of up to £7,500. Try our self-employed grant calculator to see how much you can claim.
Self-employed subcontractors often suffer CIS tax on their sales. As a result they are often due tax refunds, so if you are a net subbie who has suffered CIS tax you could be due a tax rebate.
Finally, the penalties for not filing the 2018/19 personal tax return are currently only £100. This will increase to £10 per day, each day for 90 days commencing next month.
TIP 2: Complete your 2019-20 tax return
This is unlikely to be many self-employed individuals priority but depending on your circumstances you could be due a tax rebate.
The main beneficiaries will be subcontractors who will have suffered CIS tax during the year.
Other individuals that could benefit include those who left employment during the 2019-20 tax year. Often the PAYE charged is too high as the assumption at the time of deduction was that your salary would continue throughout the tax year.
Anybody who has had a dramatic loss of income in this tax year may also benefit as they may have paid large payments on account in January 2020.
As at 3rd April 2020 we already have several clients’ tax returns prepared and ready to be signed and submitted on the 6th April 2020. They are all due tax refunds.
TIP 3: Claim a Mortgage or Rent Deferral
Due to the impact that coronavirus is having on the economy it is possible to request a payment holiday for your mortgage or rent for a period of 3 months.
This will depend on your individual circumstances and your provider. This is typically the households biggest expense, so it is a potential large source of much needed cash.
TIP 4: Claim the Business Rates Grant
Self-employed businesses which operate from business premises may be entitled to a grant. If you qualify for small business rates relief then you can claim a grant of £10k. Some sectors can claim grants of up to £25k.
As of 3rd April 2020 we are aware that our local council, Durham County Council are actively receiving grant applications and have also paid out the £10k grant.
Several of our clients have confirmed receipt of their grants, the earliest being 30th March 2020.
TIP 5: Defer Your VAT Payment
VAT registered businesses should take advantage of the VAT payment deferral.
The VAT payment for Quarters ending February, March or April 2020 can be deferred to next year.
To claim the VAT payment deferral businesses just need ensure that their Direct Debit is cancelled.
TIP 6: Delay Your Income Tax Payment
The income tax payment due 31st July 2020 has been deferred to 31st January 2021.
There will be no interest or penalties charged for failing to pay the 2nd payment on account.
Therefore if you have put money aside in a savings pot to pay your summer tax liability this could be another source of immediate cashflow.
TIP 7: Furlough Your Employees
The government has announced grants to support employers in retaining their staff.
It is known as the Job Retention Scheme. The government will effectively pay employees 80% of their salary up to £2,500 per month.
All self-employed businesses who find themselves with employees but no work due to the coronavirus crisis should look into the details of the Job Retention Scheme.
To claim the Job Retention Scheme grant see our step by step guide.
TIP 8: Apply for a Business Interruption Loan
The government will provide backing in the aid of business bank loans.
There has been a mixed response from businesses applying for the business interruption loan. As a result the government are now increasing the pressure on the banks to provide much needed funding to businesses.
TIP 9: Apply for the Married Couples Allowance
The married couples allowance is a tax saving which many couples don’t claim.
It is available where one individual earns at basic rate (currently between £12,500 and £50,000) and their partner earns less than personal allowance (currently under £12,500).
The tax saving is currently £250 but the bonus with this scheme is if you qualify you can claim for previous years. This increases the tax refund to £1,150.
ACT NOW – the claim for 2015/16 tax year ends on 5th April 2020.
TIP 10: Apply for Universal Credit
The government have many benefits available to individuals with little to no income. The main one being Universal Credit.
For more details and how to apply see HMRC Universal Credit.
DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer