Self-employment Income Support Scheme
The Chancellor has announced measures to help self-employed individuals who are not covered by the Coronavirus Job Retention Scheme (CJRS). This will apply to those who are unable to work due to the impact of the coronavirus due to reduced demand for goods/services, Government directed closedowns, etc.
The scheme will provide a grant to self-employed individuals or partnerships of 80% of their monthly profits up to £2,500. To calculate the size of the grant, HMRC will use the average profits of tax returns for the last 3 years.
Those individuals or partnerships who meet the following criteria will be eligible to apply for the grant:
- Self-employed or a member of a partnership
- Have lost trading or partnership profits due to the impact of the coronavirus
- Have filed a tax return for the 2018-19 tax year. If this has not been submitted, there are 4 weeks to do this
- Have traded in the current tax year, are presently trading in the current tax year and intend to continue trading for the remainder of the tax year
- Have trading profits of less than £50,000 and at least half of the individual's income comes from self-employment. The criteria can be met by satisfying one of the following two conditions:
- Trading profits and total income for 2018-19; or,
- Average trading profits for the last 3 tax years.
HMRC have requested that individuals do not contact them about the scheme at the present time. HMRC will review the information they hold for eligibility and send invitations to those once the scheme is in operation. It is anticipated that grants will begin to be paid in June 2020.
There have been several alternative measures announced that should also help self-employed individuals at this time:
- Income tax self-assessment payments that are due on 31 July 2020 have been postponed until 31 January 2021. HMRC will not issue penalties or interest as a result of utilising this.
- If you are unable to work, you can claim for Universal Credit and Employment and Support Allowance. Employment and Support Allowance will be paid from day 1 of sickness, rather than day 8, and will be available if you have coronavirus or are advised to say at home.
- VAT payments have been deferred for 3 months from 20 March 2020. Companies are automatically entitled to this and no penalties or interest will be charged. If the business pays by direct debit, this should be cancelled with the bank in advance of the normal payment date. You should continue to submit VAT returns on time. See our link to guidance on what you need to do.
- The Coronavirus Business Interruption Loan Scheme is being launched and will provide small and medium size business access to Government-backed loans that will be interest free for the first 12 months.
We are continually reviewing Government updates and releases in response to the coronavirus and its impact on our clients. Please get in touch with your usual contact by email for further advice and updates.