CORONAVIRUS GOVERNMENT ASSISTANCE MEASURES: SUPPORT FOR SELF-EMPLOYED WORKERS: 1 APRIL 2020
Summary: The UK Government announced on Thursday 26 March that it will provide a grant for self-employed individuals (or members of partnerships) who have lost income due to the Coronavirus outbreak. Under the Self-employment Income Support Scheme (“SEISS”), self-employed individuals with annual trading profits of less than £50,000 will be able to apply directly to HMRC for a taxable cash grant of up to 80% of their average monthly profits (up to £2,500 per month) for at least three months.
We are expecting further guidance in the coming weeks but this note summarises the details made available so far.
Eligibility: To be eligible, individuals must:
- have filed tax returns for the last 3 years, i.e. 2016/17 to 2018/2019;
- have trading profits of less than £50,000 for the past three years (if individuals have not been self-employed for the last three years, but filed their 2018/19 tax return, they will still be eligible);
- be trading when they apply (or would have been trading had the COVID-19 crisis not happened) or intend to trade in the tax year 2020-21 and have lost trading/partnership trading profits due to COVID-19; and earn more than half of their income through self-employment.
The treasury has advised that those who pay themselves a salary and dividends through their own personal service company are not covered by the scheme, but will be covered for their salary by the coronavirus job retention scheme if they are operating PAYE schemes.
How will it operate?
The individual will receive a taxable grant of 80% of the monthly average profits over the past three tax years (2016-2019), up to a maximum amount of £2,500 per month. To work out the average, HMRC will add together the total trading profit for the 3 tax years (where applicable), divide this by 3 and thereby calculate the monthly amount. HMRC will grant the monthly amount, up to the maximum of £2,500 per month, for a period of 3 months. The grant will be paid directly by HMRC into a nominated bank account, in one instalment.
Duration: The grant will be backdated to 1 March 2020, and will cover the three months to 31 May 2020, although it may be extended. It will be paid as a lump-sum payment in June 2020 (covering all three months).
Unlike the Coronavirus Job Retention Scheme for employed workers, self-employed individuals can continue to work while they receive support under SEISS.
How to apply
The scheme is not yet up and running. It is expected to be operational towards the end of April 2020.
HMRC will contact the individual if they are eligible for the scheme, and invite the individual to apply online. Individuals have been instructed not to contact HMRC directly. The scheme will only be accessible through gov.uk. please be mindful of any scams purporting to be linked to the scheme.
Further details are expected shortly. As payments are not expected until June 2020, self-employed individuals may need to rely on other measures for support in the meantime. These include deferral of self-assessment Income Tax payments, deferral of VAT payments, grants for business that pay little (or no) business rates, Universal Credit and the Business Interruption Loan Scheme. If you need further advice, please do contact us.