Self-employed workers can apply for a grant worth 80% of their average monthly profits to help them cope with the financial impact of coronavirus, the chancellor announced yesterday.
WHY WAS THIS EMERGENCY MEASURE INTRODUCED?
The government has responded following mounting pressure from many self-employed who feared the current lockdown to stem the spread of the coronavirus will prevent them from receiving a sufficient income. On 20 March 2020 Chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme for employees but confirmed that a package was being worked on for the self-employed. However last night he addressed the concerns of self-employed people and confirmed in the PM’s daily briefing a new scheme for the self-employed and confirmed they had “not be forgotten” and this scheme “is one of the most generous in the world”.
WHAT ARE THE KEY MEASURES?
- Self-employed people will be able to apply for a grant worth 80% of their average monthly trading profits over the last three years, up to £2,500 a month. This will cover 95% of people who receive the majority of their income from self-employment.
- At least half their income needs to have come from self-employment as registered on the 2018-19 tax return filed in January - anyone who missed the filing deadline has four weeks from now to get it done and still qualify.
- The scheme is open to those who with a trading profit of less than £50,000 a year. To qualify, more than half of their income in these periods must come from self-employment.
- Unlike the Job Retention Scheme for employees, the self-employed can continue to work as they receive support.
- Due to the complexities of setting up the income support scheme the grant will be backdated to March. It is proposed that the monies will arrive in a lumpsum directly into the individual’s banks account from HMRC, but not until June.
- Company owners who pay themselves a salary and dividends are not covered by the scheme. However the scheme will apply to members of partnerships.
- To minimise fraud, only those who are already in self-employment and meet certain conditions will be eligible to apply. Guidance suggests that individuals should not contact HMRC now but HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
- If you are self-employed and are already benefiting from government measures to assist in house-hold income then you will still have access to these whilst this new scheme is being rolled out.
If you are self employed, you should also consider how the introduction of IR35 in April 2021 may affect you. Our latest article should provide helpful guidance.
To listen to Rishi Sunak making his announcement click here
For the full report from the Government published 26 March 2020 click here.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice