Coronavirus: what if the government support schemes do not provide the financial assistance you require?
Despite the government initiatives providing support to the business community, there will bound to be many business owners who simply ‘fall through the net’.
This will be the case for company directors who have been paid on a low-wage, high-dividend remuneration method. In the event the director is unable to work and is furloughed, only 80% of the regular payrolled wage will be government funded.
The self employed, only recently set-up, or those with profits over £50,000, have no entitlement. Additionally, even if trading has been ongoing for years, but you have been outlaying funds on capital, which will have reduced business profits, it will lower the amount of government funding to you.
Even if you are eligible for help from the self employed scheme, it's unlikely you'll see any cash in your bank account until June at the earliest, which for many will be a struggle. It may be worth using money set aside for tax to cover immediate expenses until the grant comes through in June. This especially applies given the July self-assessment tax payment can be deferred until January 2021.
In the meantime, you can try applying for a business interruption loan if eligible, or universal credit (for universal credit, the grant will be treated as earnings).
Universal credit is a benefit which is available to many employed and self-employed workers, either if you're on low income of if you're unemployed (including if you were on a higher income, but that income has now either stopped or been reduced).
Amid the current crisis, the Government has increased the standard allowance AND removed the minimum income floor (which benefits the self-employed).
From Monday 6 April, if you're single and 25 or over, you can get a monthly standard allowance of up to £409.89 (both new and existing claims). Over a year, that's £4,918. Before the crisis, this yearly allowance was £3,813.
You may get more or less than the standard allowance dependent on your earnings (or your partner's if you live with them), whether you’ve got children, and other factors.
One of these factors is the amount of savings you've got. If you or your partner have combined savings of more than £6,000 you'll get less universal credit, and if you've (and your partner) got savings of £16,000 or over you won't be eligible for universal credit at all.
To claim for Universal credit, please visit: https://www.gov.uk/apply-universal-credit