In light of the recent regulations surrounding furlough for employers and employees, the government has also pledged to offer significant financial support to those self-employed in these unprecedented times.
The Self-Employed Income Support Scheme
Similarly to the Coronavirus Job Retention Scheme, this is a temporary scheme which is anticipated to last up to 3 months but could be extended beyond this. As part of this scheme, self-employed workers may be entitled to a direct cash grant of up to 80% of their average monthly trading profits (which is capped at the sum of £2,500).
How it works
The grant will be paid in a single lump sum instalment in June and will cover the period from the beginning of March to the end of May.
The self-employed worker’s average monthly trading profits will be calculated by adding the total trading profits from their tax returns in 2016-17, 2017-18 and 2018-19 and then dividing by three. If a worker has not submitted three years’ worth of tax returns then the formula will be varied according to how many returns they have submitted.
Those affected should apply directly to HMRC using an online form. They will be contacted in due course and advised on how the online form will operate and when it will become operational.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19 and to be eligible, more than half of the workers income in these periods must come from self-employment.
The scheme is also open to members of partnerships.
In order to qualify the self employed worker or member must:
- have submitted their Income Tax Self-Assessment tax return for the tax year 2018-19;
- have traded in the tax year 2019-20;
- be trading when they apply, or would be trading except for Covid 19;
- intend to continue to trade in the tax year 2020-21; and
- have lost trading/partnership trading profits due to Covid 19.
Who is not covered
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.
Additional provisions have also been introduced by the government to aid with the financial impact of Covid 19. This includes deferral of VAT and Self- Assessment payments. If a worker is due to pay a self-assessment payment on account by 31 July 2020 but the impact of Covid 19 causes them difficulty in making payment by that date, they may defer payment until January 2021.
If you would like to speak to our Employment team, please get in touch on 0161 832 3304.