On 26 March, the Chancellor, Rishi Sunak, announced that the self-employed had “not been forgotten” by unveiling a new Self-Employment Income Support Scheme to support those who had been adversely affected by COVID-19.
This new scheme will allow self-employed individuals and members of partnerships to claim a taxable grant worth 80% of their average trading profits, up to a maximum of £2,500 per month for the next 3 months. The Chancellor has called it one of the most generous schemes in the world, estimating that up to 95% of self-employed individuals across the UK will benefit from the scheme.
For this scheme, your average trading profit is your total trading profit for the last 3 tax years (where applicable), divided by 3 (where applicable), which is then used to calculate the monthly amount. The payment will be up to a maximum of £2,500 per month for 3 months, paid directly into your bank account in one instalment.
This financial aid is in line with the amount paid by the Government towards the wages of furloughed workers under the Coronavirus Job Retention Scheme. However, the main difference here is that the self-employed can continue working while those furloughed cannot.
Who is eligible for the scheme?
Mr Sunak announced that this scheme has been “targeted to those who need it the most”, and has therefore set out the following criteria for eligibility under the Self-Employment Income Support Scheme:
- You have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
- You traded in the tax year 2019-20
- You are trading when you apply, or would be except for COVID-19
- You intend to continue to trade in the tax year 2020-21
- You have lost trading/partnership trading profits due to COVID-19
- Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment.
- You have trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- You have average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
Plus, anyone who missed the January filing deadline has 4 weeks from now to complete it and still qualify for the scheme.
How can I apply for the scheme?
Those eligible cannot apply for this scheme yet, but HMRC will be in touch to invite you to apply online by the start of June 2020.
What other support is available for the self-employed?
Although the majority of schemes announced so far in response to the COVID-19 outbreak have focused on the SMEs, self-employed individuals could be eligible for other financial measures put in place so far, including:
- Deferral of Self-Assessment Income Tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- Grants for businesses that pay little or no business rates
- Increased amounts of Universal Credit
- Business Interruption Loan Scheme
More support available from HMRC
For more support, HMRC has set up a dedicated helpline, should you have any concerns regarding paying tax on time due to COVID-19. You can call 0800 024 1222 from Monday to Friday between 8am and 4pm. Find out more about the helpline here.
While our team are safely working remotely, we are here to keep you informed of all updates during this time so you can be aware of all the support being made available to you and your business. If you have any questions or enquiries, please get in touch with the team here or call us on 01702 466 886.