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  • Coronavirus – what should I do if I'm self-employed?

    The government's scheme to help the self-employed is now up and running. We take a look at what those who work for themselves could do to help get through these challenging times.

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    This article is more than 6 months old

    It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

    Throughout the coronavirus pandemic, many working people in the UK have seen their income reduced and the future of their jobs uncertain. And this has been a particularly worrisome time for those who are self-employed – with a recent study by LinkedIn revealing that three quarters of self-employed respondents have had their income squeezed by the crisis.

    The government’s scheme to help the self-employed opened on 13 May. So based on our understanding on the help available from the government, we’ve put together some quick tips on managing and prioritising your finances throughout these hard times.

    Remember this article is not advice. If you need professional and personal advice about your finances and investments, please speak to a financial adviser.

    See what you’re entitled to

    On 13 May, the claims process started for the Government’s Self-Employment Income Support Scheme (SEISS). HMRC have said that they will contact those who are eligible, but you might want to check if you fall into the following:

    • Your business has been adversely affected by coronavirus
    • You were trading in 2019/20 tax year and you intend to continue trading in the 2020/21 tax year
    • You earn at least half of your income through self-employment
    • You have trading profits of no more than £50,000 per year
    • You traded in the tax year 2018 to 2019, and submitted your Self-Assessment tax return for that tax year on or before 23 April 2020

    If you’re eligible, you could see a grant paid into your bank account by 25 May, or within six working days of a claim being approved.

    The taxable grants are worth up to 80% of your average monthly trading profits based on the tax years 2016/17 to 2018/19. It will be paid as a single instalment to cover 3 months’ worth of income, capped at £7,500 (i.e. £2,500 per month). It’s a grant – so that means you don’t need to pay it back.

    Find out more about the scheme

    Keep emergency cash working

    The pandemic has been a scary reminder of how important it is to have some back up cash in case you need it or something goes wrong.

    At HL, generally speaking we think having 3-6 months’ worth of expenses is a good position to be in, if you can. These are essential expenses such as your mortgage or rent, food, utilities and medical expenses – not your complete monthly outgoings.

    Interest rates certainly aren’t what they used to be. But every little helps. If you’ve got some cash make sure it’s earning as much as you can squeeze out of it.

    How to get better savings rates

    Protect yourself

    Although it’s something we might not want to think about, coronavirus has made many people think about their own mortality. What would happen if you die? How would your family cope?

    Many employees have life and critical illness cover as part of their workplace benefits, and rightly so – it’s a very important thing to have. But it’s easily missed and often overlooked by people working for themselves.

    In fact, it’s estimated that 93% of self-employed workers have no critical illness cover in place at all. So if you’re one of the 93%, here’s what we think you should think about.

    Firstly, you need to think about worst-case scenarios – what would this mean financially for your family at an already awful time? Dying or becoming seriously ill could put you or your family in a precarious financial position.

    Once you’ve considered what could happen, check what you already have in place. Do you already have any private policies? You could also consider which state benefits exist and what you might be entitled to.

    If there are shortfalls, you need to think about how to plan for them. For something like life cover, the market is pretty homogenous and competitive, so it should be easy to use comparison websites to get the best cover to suit you. For other types of protection, such as income protection or critical illness, policies can vary from one provider to the next and can be a little more complicated – so it’s important to do your research first.

    Remember though everyone’s circumstances are different so you need to consider what’s right for you. For example for some looking at consolidating or paying off short term debt maybe something that needs more immediate attention and could therefore take priority.

    Remember this isn’t personal advice. If you need help with choosing what types of protection could suit you and your family, you could consider speaking to a financial adviser.

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      Important notes

      This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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