Self-Employed Income Support Scheme
Written by Ray Coman
An announcement made today on 26th March aims to bring the support available to the self-employed in line with that already available to employees via the Coronavirus job retention scheme.
A self-employed person can obtain a grant equal to the lower of 80% of net monthly income and £2,500. Net monthly profits are based on an average of profits for the preceding three tax years.
Only sole traders or partners with profits below a set limit will be eligible. The limit is:
- Either a profit of £50,000 or lower for the tax year of 2018-19; or
- An average profit of £50,000 for the tax years 2018-19, 2017-18 and 2017-16.
Therefore, if 2018-19 resulted in a profit spike, eligibility could still be intact by reference to earlier years. Where self-employment started after 6 April 2016, only the tax years of self-employment would be included in the averaging calculation. Over 50% of income must be derived from self-employment activity.
Unfortunately, sole traders who have registered in 2019-20 will not be eligible. Sole traders still need to be in business for 2019-20, (or still in business were it not for Covid19), and with the intention to continue trading during 2020-21. A sole trader must submit a 2018-19 Tax Return by 23 April 2020 in order to protect eligibility.
The grants will be paid from 1 March 2020 to 31 May 2020. HMRC intends grants to be payable in one lump sum from about June.
The facility for making an application is not yet available through the website. There is no requirement to contact HMRC at this stage. HMRC will contact taxpayers already registered as self-employed in due course. Applications will be via online form.
Until such a time as the grants are available, self-employed can access cash via Universal Credit and the Coronavirus Business Interruption Loan Scheme.