It goes without saying; taking the plunge into self-employment during 2021 will look a little different than this time last year.
The global COVID-19 pandemic and ensuing economic crisis hit businesses hard. Consequently, there are even more factors for aspiring entrepreneurs to consider before taking the leap into starting their own business.
We look at what going self-employed in the Coronavirus climate involves, as well as where to find support and advice.
How Coronavirus is shaping the self-employment landscape
It’s fair to say that COVID has affected every person and business in some way, shape or form, especially those reliant on social contact or travel.
Data from the Institute of Fiscal Studies shows how the pandemic (and subsequent restrictions) are hitting some sectors more than others. Starting out as self-employed in these areas might need particular consideration at the moment.
- The hospitality industry, such as hotels, restaurants, and pubs.
- Arts and leisure.
- Childcare services
- Domestic services, such as cleaning or cooking.
- Non-essential retail.
- Some types of passenger transport, such as airport transfers
- Providers of health and personal care, such as hairdressers or manicurists.
What support is out there for the newly self-employed right now?
As the economic impact of the virus became clear, the government began to implement financial measures to support existing self-employment. The Self-Employment Income Support Scheme (SEISS) forms part of the care package.
SEISS provides non-repayable government grants to self-employed workers struggling financially as a result of the COVID crisis.
However, the key here is existing self-employment. The initiative is only open to those who filed a tax return for 2018/19. Sadly this doesn’t extend to the newly self-employed.
Despite that, data from the Enterprise Research Center (ERC) reveals there are 1.1 million self-employed people working in those high-risk sectors
It puts a real focus on the importance of business funding for startups and self-employed business owners at the moment.
Other options include:
- Funding and schemes available through the Business Enterprise Fund.
- Test and Trace Support Payment scheme
- Employment and Support Allowance (ESA)
- Universal Credit
Other considerations for new businesses
As well as, or rather, despite, COVID-19, there are some startup considerations which are always worth knowing.
Protect yourself against a predicted rise in phishing attacks
According to a recent study by cyber security company Centrify, nearly two thirds of UK business leaders anticipate an increase in COVID-related phishing attacks during 2021.
More than half (52%) of respondents also predict a rise in cyberattacks. But, a significant 37% of executives admitted having no plans to improve their cyber security.
As a self-employed business owner, the security of your business and its data is your responsibility. With experts predicting a surge of online attacks, now is the perfect time to make sure you’re well protected.
Do you have the right business insurance policies?
When going self-employed and setting up your solo venture, you may need to take out business insurance.
Public liability, product liability and employer’s liability (if you plan to recruit staff) are amongst the most common policies business owners take out.
Business interruption insurance is also available to you. Since the catastrophic effects of COVID-19, more business owners are seeing the value in investing in a business interruption policy that protects them from income losses due to unforeseen disaster.
Key dates and deadlines for sole traders
As a start-up sole trader, there are some important dates to pop into your calendar.
- The new tax year begins on 6th April 2021…
- …and ends on the 5th April 2022.
- The deadline for submitting your tax return and paying the bill is 31st January. Remember that tax returns are submitted after the tax year ends. If you need to submit a tax return for the 2019-20 tax year, your submission deadline is 31st January 2021.
Although the official deadlines are set by HMRC, we always recommend getting organised well before the due date.
Putting your self-assessment return off until the latest possible moment risks making avoidable mistakes. Not to mention raising your stress levels. Plus, if you’re due a refund on anything (especially if you’re a subcontractor), you’ll get it sooner!
Making Tax Digital (MTD) in 2021 (and beyond)
After being delayed from 1st April 2020, the second phase of HMRC’s Making Tax Digital (MTD) initiative should roll out on 1st April 2021.
At the moment, only VAT-registered businesses with a taxable turnover over £85,000 must be MTD compliant.
As of 1st April 2021 however, all VAT-registered are required to use MTD-compatible software to submit VAT returns for periods starting on (or after) 1st April 2022.
Do you have a tax-related topic that you need clearing up? Head on over to our free Ask a Tax Question tool to submit your query!