Self-employment income support scheme – What you need to know

Published: March 30 2020

Last week (26 March 2020), Chancellor Rishi Sunak announced an income support scheme to support the UK’s self-employed affected by the COVID-19 (coronavirus) outbreak. This brings parity with the Coronavirus Job Retention Scheme, which was also announced last week.

This support is very much welcomed as millions of self-employed individuals across the UK could benefit from the scheme through direct cash grants.

Who is eligible?

Individuals can apply for the cash grant if they are self-employed or a member of a partnership and:

• have submitted their Income Tax Self Assessment Tax Return for the tax year 2018-19
• traded in the tax year 2019-20
• are trading when they apply, or would be except for COVID-19
• intend to continue to trade in the tax year 2020-21
• have lost trading/partnership trading profits due to COVID-19

In addition:

• have a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-2018 and 2018-2019
• more than half of their average taxable income in the periods above come from self-employment

Who is not eligible?

Individuals who pay themselves a salary and dividends through their company are not covered, however, they may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

What is the entitlement?

Individuals will get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

• 2016 to 2017
• 2017 to 2018
• 2018 to 2019

To work out the average, HMRC will add together the total trading profit for the three tax years (where applicable) then divide by three (where applicable) and use this to calculate a monthly amount. This will be capped at £2,500 per month.

How do individuals apply?

At present individuals cannot apply for the scheme. HMRC will contact individuals if they are eligible and invited to apply online.

When will the grants be payable?

Grants will start to be paid at the beginning of June, as a taxable lump sum covering March, April and May.

This scheme will initially cover these three months, however, it may be extended.

This article was published on 30 March and was up to date at time of publication.