Yesterday evening, the Government announced the Self-Employed Income Support Scheme (the “Scheme”).
Under the Scheme, individuals who are self-employed (including members of a partnership) may be entitled to receive a grant equivalent to 80% of their average monthly profits over the last three years. As with the support available to employees through the Coronavirus Job Retention Scheme, the grant will be capped at £2,500 a month, and will be available for at least three months.
To be eligible for the Scheme, the individual must:
- Have annual trading profits of less than £50,000;
- Make the majority (at least 50%) of their income from self-employment;
- Already be in self-employment and have filed a tax return for the tax year 2018/2019;
- Traded in the tax year 2019/2020;
- Be trading (or would be trading except for coronavirus), intend to continue trading in the next tax year and have lost profits due to coronavirus.
Those who are late filing their 2018/2019 tax return will have additional time to do so, until 23 April 2020.
It is expected that 95% of self-employed people will be eligible. Those who are eligible will be contacted directly by HMRC and will be required to complete an online form in order to receive the grant. Following this, the grant – which will cover the three months to May – will be paid directly into their bank account at the beginning of June.
The scheme does not appear to cover those who trade through limited companies by which they are also employed and these individuals will have to apply for support under the Job Retention Scheme.
Although this Scheme will be welcomed, the delay until June will be painful for many self-employed individuals, especially those with little savings.
The Chancellor has also advised that self-employed individuals may apply for business interruption loans through the Government website, although this option will not be available to all. Further, although Universal Credit is now available to the self-employed, a huge surge in demand has overwhelmed the system, with many individuals reporting great difficulties in accessing it.
Interestingly, the Chancellor alluded to future tax increases for the self-employed, saying that there was a ‘case’ for equalisation, particularly of NIC rates. This will be something to watch over the coming months.