Following Prime Minister Boris Johnson’s pledge to give the 2 million self-employed workers in the UK “parity of support” with those who are employed, many have eagerly awaited a further announcement from Chancellor Rishi Sunak.
During the highly anticipated update on 26th March, the Chancellor announced a new self-employed support scheme which gives self-employed workers a taxable grant of up to 80% of average monthly earnings.
Describing it as one of the most generous packages in the world, the support package for self-employed people will run for a minimum of 3 months and will cover 80% of average earnings over the past three years earnings (up to £2,500 per month).
This applies to those who are a self-employed individual or a member of a partnership and:
- Had a trading profit of less than £50,000 for 2018-19 (or an average trading profit of less than £50,000 over the 3 years from 2016-17 to 2018-19)
- Earned the majority (more than 50%) of their income from self-employment for 2018-19 (the same averaging alternative as above can apply)
- Have submitted a tax return for 2018/19
- Traded in the 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
If you started trading between 2016 and 2019, HMRC will only use those years for which you filed a self-assessment tax return.
How to apply:
You cannot apply for this scheme yet.
HMRC will contact you directly to invite you to apply for the support and it is expected that this grant will be available to be accessed from the beginning of June. Please note that it is being advised that you should not contact HMRC yet. We will be able to provide you with support to make the applications once you have been contacted by HMRC.
Unfortunately, we are aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, please do not respond. HMRC will never contact you out of the blue to ask for these details.
Self-employed individuals who have not yet submitted their tax returns have 4 weeks from 26 March 2020 to submit their tax return and still be eligible for this support. As such they have until 23 April 2020 to submit their tax returns and should act now.
The self-employed are still able to apply for Universal Credit (up to £1,800 per month) and business interruption loans in the interim until the above funding becomes available.
The government have advised that self-employed individuals will also be entitled to a deferment of their July 2020 payment on account to January 2021. Guidance currently indicates they will not be required to apply for this deferment as it will be automatic.
Where individuals do have the funds to make the 31 July 2020 payment by the usual date, they can still make this payment. It may be beneficial to cashflow in the long term, if short term cashflow support isn’t required, because there is no indication that the usual amount payable in January 2021 will be reduced in any way. As such any deferment may significantly increase the amount payable in January 2021.
We will be issuing further details on the support available for the self-employed. To ensure you are kept in the loop, please sign up to our email newsletter here or take a look at our Coronavirus hub here.