Government support to self-employed individuals

Posted on March 27, 2020

The money – up to a maximum of £2,500 a month for at least 3 months will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest.

It will be called the Coronavirus Self-employment Income Support Scheme, and is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.

More than half of a claimant’s income needs to come from self-employment.

The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19

Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.

Millions of people across the UK could benefit from the new Self-Employed Income Support Scheme, with those eligible receiving a cash grant worth 80% of their average monthly trading profit over the last three years.

This covers 95% of people who receive the majority of their income from self-employment.

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 outbreak.

Cleaners, plumbers, electricians, musicians, hairdressers and many other self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into people’s bank account.

 To qualify, more than half of their income in these periods must come from self-employment.

HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.

The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May.

Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.

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

The government’s new help comes on top of a six-month delay for tax payments through the self-assessment system and VAT deferrals. Also £1 billion more support for renters and access to three-month mortgage holidays

Those with the lowest incomes are in line to receive more generous benefits payments, announced previously.

The chancellor said those applying for universal credit should be paid within a few days.

In summary:

•           further information and details of the scheme will be shared shortly by HMRC

•           HMRC will use the average trading profits from tax returns in 2016-17, 2017-18         and 2018-19 to determine the size of the grant (subject to trading profits cap)

•           this scheme also applies to members of partnerships

•           before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account

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