Chancellor Rishi Sunak has just announced the long awaited Self Employed Income Support Scheme as part of the daily Coronavirus briefing. This will apply to 15.3% of the workforce.
This will be a taxable grant, calculated at 80% of the average monthly profits shown on your tax returns for the last three years, up to £2,500 per month. Any self employed person who makes the majority of their income from Self Employment is eligible.
The amount of the grant received will need to be included on your tax return for the year ended 5th April 2021, and will be included in your tax computation.
The scheme is open to any self employed worker, with profits of up to £50,000. If you declared average profits over those three years in excess of £50,000, you will not be entitled to the support.
The initial period for the scheme will be three months, but this may be extended, as with the other types of support that have been announced.
It is estimated that 95% of the self employed population will qualify for the support.
The Self Employed Income Support Scheme Process
HMRC will send a simple online form to all the self employed on their records. The details for these recipients will come from those who submitted a tax return for the year ended 5th April 2019.
When will payments come out?
The system for the Self Employed Income Support Scheme is still in development, and has been very complex to devise. As a result, and to allow those who are still to submit their Tax Return for the year ended 5th April 2019 to do so, the first payments should be seen by early June. This is a target date and may slide.
The amount will be paid as a lump sum.
What if you didn’t submit your 2019 Tax Return?
You have been given a grace period of four weeks from today, 26th March, to do so in order to qualify for the grant.
I’m very newly Self Employed. Do I qualify?
If you submitted a tax return for 5th April 2019, and meet the other requirements as far as profits are concerned, you will qualify. If you don’t have three year’s tax returns to be averaged, then you will only receive an amount based on the one or two returns that HMRC can refer to.
If you have not yet submitted a tax return that shows self employed income, you will not be eligible for the Self Employed Income Support Scheme, as HMRC have no information to draw on. This is to prevent fraudulent claims.
Can I access any other support in the meantime?
Yes. You can access the Coronavirus Business Interruption Loans. Your Payment on account for July has been deferred and does not need to be paid until January 2021, and you may qualify for one of the Business Support Grants, linked to Business Rates. You can find more details of these measures here. You may also be able to apply for Universal Credit or other Benefits.
I am a Director, and receive a small salary and dividends. Does this apply to me?
No. I’m afraid that you are not deemed to be Self Employed as far as HMRC are concerned.
REMEMBER: This is a TAXABLE grant; there will be tax to pay on the grant amount received at a later date.
If you have any questions about this or any of the other announcements around Coronavirus support, please get in touch. We’re here to translate and collate as much of the information that’s coming out as we can, and help work out how it affects you.
You can find the guidance on the Self Employed Income Support Scheme here.