The Chancellor has announced unprecedented measures to support the self-employed. Full details of the Self-employed income support scheme are yet to be published (as of 26 March) but it has been promised that the UK Government would pay up to 80% of self-employed individuals' profits (up to a cap) that have been adversely affected by the Coronavirus outbreak.
What is being offered?
The proposed support offered is similar to that of the Job Retention Scheme in that those entitled to Self-Employed Income Support Scheme would receive a taxable grant worth 80% of average monthly profits capped at £2500pm. The income will be calculated by taking the average of income over the last three years.
While claiming a grant under this scheme, self-employed people can continue to do business if that is an option for them under current restrictions. The scheme is only open to anyone with trading profits of up to £50,000, therefore self-employed people who earn more will not qualify.
Similarly the scheme is only open to those who make more than half of their income from self-employment; if individuals are employed but have a 'side job' which is self-employed, they will not be eligible. This may have implication for individuals where only a portion of their income is secured through self-employment as they would not be eligible for this scheme
In a measure to minimise fraud the scheme is only open to those who have submitted a tax return for 2019. However, those who did not submit their tax return by the due date of 31 January 2020, and have not yet submitted one, can still submit a tax return for 2019 for a further four weeks from today.
HMRC will contact eligible taxpayers directly and pay the grant straight into their bank account after inviting them to fill out an online form.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump sum instalment covering all three months, and will start to be paid at the beginning of June. Those with immediate cash flow issues are still encouraged to make use of other business support measure previously introduced.
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