- 26th March 2020
- Posted by: Edward Kirkby
- Category: Coronavirus
On Thursday 26th March, the chancellor announced the Self-Employed Income Support Scheme to provide support to those that are self-employed.
This support will be given in the form of a taxable cash grant, based on an individual’s average monthly profits across the last 3 years.
The grant given will be for a maximum of £2,500 per month, to match the support currently being offered to employers and their employees under the Coronavirus Job Retention Scheme. It has also been stated by the chancellor that the Self-Employed Support Scheme will run for 3-months initially to May 2020, with scope to extend if necessary.
For those without 3 years’ worth of tax returns or accounts, the average will be taken from the number of tax returns/accounts that have been submitted.
Who is eligible?
To qualify for the taxable grant, individuals will need to meet all of the below criteria:
- Average annual trading profits of up to £50,000 per year (across the last 3 years, or the number of tax returns submitted if less than 3 years)
- Majority of income earned from self-employment
- The individual must already be in self-employment, and have submitted a tax return for the 2018-19 tax year.
To ensure that as many people as possible have access to the support, the government will be granting a 4-week extension, beginning 26th March, to allow anybody that has not yet filed their 2018-19 tax return (which was due for filing by 31st January 2020) to do so.
Based on this eligibility criteria, the chancellor has stated that 95% of people who derive the majority of their income from self-employment will benefit from the Self-Employed Income Support Scheme.
In a crucial statement, HMRC have clarified that directors of limited companies who pay themselves a salary and dividends do not qualify for the Self-Employed Income Support Scheme, but will be covered for their salary via the Coronavirus Job Retention Scheme.
How to apply
There is no action that eligible self-employed individuals need to take to access the grant. HMRC will make contact with all individuals who meet the qualifying criteria. The grant will then be paid directly into the bank account of the self-employed person.
An estimate provided by the chancellor indicates that we should expect the Self-Employed Income Support Scheme to go live by the beginning of June at the latest. People in need of immediate support due to a reduced income as a result of the Coronavirus should apply for Universal Credit.
Self-employed businesses are also able to apply for a loan, backed by the government for 80%, of up to £5mil under the Coronavirus Business Interruption Loan Scheme.
- If you have not yet submitted a 2018-19 tax return, but need to, you have 4-weeks from 26th March to do so and qualify for the Self-Employed Income Support Scheme
- To qualify, the majority of your income must come from self-employment
- There is no action for you to take, HMRC will contact you if you’re eligible
Please get in touch if you would like any further advice on the Coronavirus and government support.