Government Announces Support for the Self-Employed

The Chancellor, Rishi Sunak, has announced support for the UK’s self-employed affected by the coronavirus outbreak by way of the Self-employment Income Support Scheme.

How much am I entitled to?

Eligible individuals will receive a taxable grant of 80% of their average, monthly trading profit over the last three years up to a maximum of £2,500 per month.  The scheme will run for an initial period of 3 months but could be extended if required.

HMRC will use the data on 2018/19 Tax returns to identify those eligible.

Note if you claim tax credits, you will need to include the grant in your tax credits claim as income.

When will I get the grant? 

The grant will will cover March, April and May 2020 and will be paid directly into your bank account in one instalment. The first payments will be made in June.

How do I apply?

Anyone eligible for the scheme will be able to apply directly to HMRC for the taxable grant using an online form.

Note that you cannot yet apply for this grant.  HMRC will contact you, if you are eligible for the scheme, and will invite you to apply online.  

They have asked that people do not contact them regarding the scheme as this will delay the set-up work being done. 

Beware of scammers

The only way to access the scheme will be via the Gov.UK website. HMRC have warned that if anyone texts, calls or emails claiming to be from HMRC, advising that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

What are the conditions for applying?

Only individuals who meet all of the following conditions are eligible for the scheme:

• They must have submitted their 2019 Tax Return to HMRC

• They must be trading when they apply, or would have been trading apart from COVID-19

• They must have traded in the tax year to 5 April 2020 and be intending to continue trading in the tax year to 5 April 2021

• They must have lost trading profits due to COVID-19

The scheme also applies to members of partnerships.

In addition, the annual self-employed trading profit must also be less than £50,000 and more than half of the individual’s income must come from self-employment. This is determined by at least one of the following conditions being true:

• having trading profits/partnership trading profits in 2018/19 of less than £50,000 and these profits constitute more than half of the total taxable income

• having average trading profits in 2016/17, 2017/18, and 2018/19 of less than £50,000 and these profits constitute more than half of the average taxable income in the same period

If you started trading between 6  April 2016 and 5 April 2019, HMRC will only use those years for which you filed a Tax return.

What if my 2019 Tax Return is still outstanding?

If you wish to make a claim and have not yet submitted your 2019 Tax return, you must lodge this by 23 April 2020.

You can read more about the scheme here:-

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

This brings parity with the Coronavirus Job Retention Scheme, announced by the Chancellor last week, where the Government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the pandemic.

Those who pay themselves a salary and dividends through their own company are not covered by the scheme but may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

https://jsca.co.uk/coronavirus-job-retention-scheme-and-other-assistance-for-businesses/

Anyone who does not qualify for the scheme may still be able to access grant funding, income tax and VAT deferrals, government backed interest-free loans, Universal Credit or three-month mortgage holidays.

We are expecting the finer detail of the scheme to be published by HMRC shortly and will provide a further update as soon as this is available.

 

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The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.