The chancellor has just announced the Self-employed Income Support Scheme, due to the coronavirus situation.
The scheme aims to pay 80% of self-employed profits, as a taxable cash grant, up to a maximum of £2,500 per month. The scheme is planned to last for a minimum of 3 months.
The first payments are expected to be made in June and will be backdated – so people will receive 3 months’ worth as one lump sum.
The 80% figure is based on the average monthly trading profit over the last three years.
The scheme will be open to people 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. In addition, over half of your income in these periods must have come from self-employment.
There are also a few other requirements to qualify for the scheme:
- You must have submitted your tax return for the 2018/19 tax year (If not, there is a short extension window available)
- Have traded in the tax year 2019/20
- Are still trading when you apply, or would have been except for the coronavirus situation
- You intend to continue to trade in the tax year 2020/21
- You have lost trading profits due to the coronavirus situation
There is no need to take any action initially – HMRC will identify those who are already in self-employment and meet the above conditions and will then contact them directly with guidance on how to apply.
Although not technically self-employed, those people who pay themselves a salary and dividends through their own company are unfortunately not covered by the scheme. There are also restrictions on the help available.
With regards to immediate cash needs, I have shared about how the 31st July payments on account have been deferred until 31st January 2021 – this cash could perhaps be temporarily reallocated until the grants are expected to be issued in June.
Before the 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.