On the evening of Thursday 26 March 2020, the Chancellor of the Exchequer announced the government’s “Self-Employed Income Support Scheme, following calls that the measures that he had previously announced did not go far enough to support self-employed individuals.
Under the Self-Employed Income Support Scheme (“the Scheme”), eligible self-employed individuals (and members of partnerships) can receive direct cash grants, worth up to 80% of their average trading profit over the last 3 years, of up to £2,500 per month for the last 3 months.
The Scheme will be open to self-employed individuals with a trading profit of less than £50,000 in 2018-2019 or an average trading profit of less than £50,000 from 2016-2017, 2017-2018 and 2018-2019.
For a self-employed individual to qualify for the Scheme, more than half of their income in the aforementioned periods must come from self-employment.
The Scheme will cover the three months to May 2020.
Self-employed individuals will be able to apply directly to HMRC for the taxable grant, using a simple online form. Only those who are already in self-employment and meet the above conditions will be eligible to apply.
The cash grant will be paid directly into the individual’s bank account. Grants will be paid in a single lump sum instalment covering all three months to May 2020 and will start to be paid at the beginning of June. The government has advised that individuals should not contact HMRC now and instead HMRC will be identifying eligible taxpayers and contacting them directly with guidance on how to apply for the Scheme.
Before grant payments are made, self-employed individuals will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business s continuity loans where they have a business bank account.
The government has confirmed that the scheme will cover 95% of people who receive the majority of their income from self-employment. 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.
*The information set out in this article is correct at the date of publication (27 March, 2020). The effect of coronavirus on businesses is a fast-changing area and so it is important to obtain legal advice to ensure you are properly protected. Find out more about the latest Government support for the self-employed.
If you have any questions regarding the impact of the Coronavirus upon you or your business or are seeking up-to-date legal advice, contact Alice Toop on 01202 294 566 or email AliceToop@steeleraymond.co.uk.
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