Covid-19: Self-employed support scheme
It has been announced that the government will pay self-employed people adversely affected by coronavirus a taxable grant worth 80% of their average monthly trading profit over the last three years, up to £2,500 per month, for at least three months (in line with the employed scheme).
The scheme will apply to people who have filed a 2018/19 tax return and late filers will have another four weeks to file (at time of writing a deadline of 23 April 2020). It will not apply to anyone who started trading in 2019/20 i.e. those that have started a new business in the last 12 months. The scheme will be open to those with trading profits of £50,000 or less, who make the majority of their income from self-employment.
Those who trade through a limited company and pay themselves a salary and dividends are not covered but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
HMRC will contact self-employed people eligible to receive financial support by the beginning of June. Using an online form, they can then apply directly to HMRC for the grant, and the tax authority will pay the grant straight into their bank accounts.
The Chancellor stated that due to the complexity of designing a completely new system at pace, the government will be looking to make the first payments “no later than the beginning of June”. Grants will be paid in a single lump sum instalment covering the three months for which the scheme is applicable.
For self-employed people who the Chancellor said “may be struggling now”, most will be able to access the Business Interruption Loan Scheme, and the government has also changed the welfare system so that self-employed people can now access Universal Credit in full. Unlike employed workers furloughed during the outbreak, self-employed workers can also continue working and claim the grants.