Self-employment Income Support Scheme

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The Chancellor has now unveiled the package of support available for the self-employed. For those eligible, the government will pay a taxable cash grant of up to 80% of their average monthly earnings, based on previous earnings over the last three years, and capped at a maximum of £2,500 a month.

If less than three years of accounts are available, then the Treasury has said that they will look at what is available and make a judgement on that. And unlike the employment scheme, it appears the self employed can continue to work during the period in which the grant is available.

To be eligible, self-employed people must:

  • Have taxable profits of less than £50,000 in 2018-19, or average taxable profits of less than £50,000 in 2016-17, 2017-18, and 2018-19;
  • Have traded in the tax year 2019-20;
  • Be currently trading at the time of application, or would be but for the coronavirus;
  • Make more than half of their income from self employment; and
  • Already be self employed and have filed a tax return on this basis for the 2018-19 tax year.

People who work through their company and pay themselves a dividend will not be eligible for support under this scheme.

The self employed will need to apply directly for this support to HMRC using an online form (not yet available). HMRC will approach people who are eligible based on data they already hold to invite them to apply.

The scheme is expected to be accessible no later than June, with the self employed receiving a lump sum payment of three months of backdated support directly from HMRC in that month. In the meantime, the self-employed can access Universal Credit, or apply for a Coronavirus Business Interruption Loan.

Interestingly, the Chancellor also said in his speech that those who wished to be treated like the employed when it comes to state handouts would also be expected to pay in in the same way in the future. This suggests that, post-crisis, there may be amendments to the UK’s tax system to bring the taxation of the self employed more in line with the employed.