Financial Support for Self-Employed Workers - COVID19 / Coronavirus
The coronavirus pandemic has been a stressful time for everyone, especially self-employed workers who up until recently, were going to be left with no financial assistance if they were unable to work. Luckily, the government have now launched the Self-Employment Income Support Scheme and we’ve broken down all of the information for you below.
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 a month. It will be available for 3 months but may be extended.
The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.
You can make a claim for Universal Credit while you wait for the grant. You should record the grant as part of your self-employment income, and it may affect the amount of Universal Credit you get. This will not affect Universal Credit claims for earlier periods.
If you receive the grant you can continue to work or take on other employment, including voluntary work.
If you have other employment as a director or employee paid through PAYE your employer may be able to get support using the Job Retention Scheme.
WHO CAN CLAIM?
You can claim if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Self-Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when you apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have lost trading profits due to coronavirus
You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will as usual use a risk-based approach to compliance.
Your trading profits must also be no more than £50,000 and more than half of your total income for either:
- the tax year 2018 to 2019
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
If you have not submitted Self-Assessment tax returns for all 3 years, find out how they will work out your eligibility here.
If you have not submitted your Self-Assessment tax return for the tax year 2018 to 2019, you must do this by 23rd April 2020, or you will not be able to claim. HMRC will review any late returns in the usual way.
HMRC will use data on the 2018 to 2019 tax returns already submitted to identify those eligible.
They will not take into account any changes made to submitted returns after 26th March 2020, when working out your eligibility or amount of the grant.
Find out how HMRC works out your total income and trading profits for the Self-employment Income Support Scheme here.
If you have loans covered by the loan charge
If you’re self-employed and have received payment for work or services in the form of a loan or other form of credit covered by the loan charge, you may be able to claim the grant, however your eligibility and average trading profits will be based on either:
- the average of the tax years 2016 to 2017 and 2017 to 2018
- the tax year 2017 to 2018 if you were not self-employed in the tax year 2016 to 2017
You also do not have to file your 2018 to 2019 Self-Assessment tax return by 23rd April 2020. You should file by the 30th September 2020.
HOW MUCH WILL I GET?
You’ll get a taxable grant based on your average trading profit over the 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
To work out the average trading profit they will add together your total trading profits or losses for the 3 tax years then divide by 3.
If you have not submitted Self-Assessment tax returns for all 3 years, they will work out your average trading profit based on continuous periods of self-employment, which will be either:
- the tax years 2017 to 2018 and 2018 to 2019
- the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017
The grant will be 80% of your average trading profit, divided by 12, which will give a monthly amount. They will then pay this, or up to a maximum of £2,500 a month, whichever is lower.
This grant will then be paid directly into your bank account, in one instalment.
HOW DO I CLAIM?
The online service you’ll use to claim is not available yet. HMRC will aim to contact you by mid-May 2020 and will make payments by early June 2020.
If you’re unable to claim online an alternative way to claim will be available. Keep an eye on this page further updates, including the steps you can take to make it easier to claim using the GOV.UK online service.
You do not need to contact HMRC, as this will only delay the urgent work being undertaken to introduce the scheme.
You will only be able to claim using the GOV.UK online service. If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam.
AFTER YOU’VE CLAIMED
Once HMRC has received your claim and your grant is approved, they will contact you to tell you how much you’ll get and the payment details.
OTHER HELP YOU CAN GET
The government is also providing the following help for the self-employed:
- deferral of Self Assessment Income Tax and VAT payments
- grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
