Government Support for Self-Employed Blog Post

Self-employment Income Support Scheme

Help will soon be available for self-employed people through the Government’s Self-employment Income Support Scheme. However, HMRC have yet to create the mechanism to pay out, so it’s not yet possible to apply.

As a Self Employed individual, you will be entitled to claim support through this scheme. The scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months, April, May and June.

I have summarised the current advice below:

Can I apply?

Essentially, you can apply if you are a self-employed individual and:

  • have submitted your 2018-19 tax return, and have traded in the tax year 2019-20
  • are still trading when you apply, or would be except for COVID-19, and intend to trade in the tax year 2020-21
  • have lost trading profits due to COVID-19
  • your Self Employment trading profits were less than £50,000 over the averaging period and in 2019/20
  • your trading profits make up more than half of your taxable income

How much you’ll get

You’ll get a taxable grant which will be based on 80% of the average profits from the last three tax years. (2016-17, 2017-18 and 2018-19). HMRC will calculate a monthly average income up to a maximum of £2,500 per month for 3 months.

The scheme is expected to commence paying out in June 2020. It will be paid directly into your bank account, in one instalment.

If you add together the profits that you have reported to HMRC over the three tax years and divide by 36, this should be your monthly claim

How to apply

You cannot apply for the scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. You will access this scheme only through the gov.uk website. If you have never accessed your personal tax account, you can get set up here https://www.gov.uk/personal-tax-account

Warning

If you receive a text message, phone call or an email claiming to be from HMRC, it is a scam! HMRC intends to write to taxpayers who are registered for Self-Assessment. Do not click on a link or give any personal information such as your name, credit card or bank details.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, HMRC will contact you with payment details.

If you claim tax credits, you’ll need to include the grant in your claim as income. When you complete your 2020-21 tax return, it will have to be included as taxable income

Many self-employed people may find it challenging to prove their status and may not have sufficient submissions to HM Revenue & Customs to qualify. Good reasons for submitting tax returns on time and having reliable records.

Full scheme details

Details of the support can be found here

Other help you can get

The government is also providing the following additional help for the self-employed:

  • deferral of the next VAT and Self-Assessment income tax payments
  • grants for businesses that pay little or no business rates
  • Business Interruption Loan Scheme
  • you may be entitled to get Universal Credit – any income which your partner or spouse receives will be taken into account

Here is a link to the Benefits calculator https://www.gov.uk/benefits-calculators.