This is a really difficult time for everyone, but it is particularly difficult for those who are self-employed. The government has now announced a series of measures designed to support self-employed workers, like you. We’ve summarised them here so you have a comprehensive guide to what might be available to you. Please note that the exact support you are entitled to will be wholly dependent on your personal circumstances.
Self-employment Income Support Scheme:
The Self-employment Income Support Scheme, or SEISS, will offer support to self-employed individuals whose income has been negatively impacted by COVID-19. The scheme will provide self-employed individuals with a grant worth 80% of their profits, up to a cap of £2,500 per month. In order to calculate the average profits and determine the size of the grant eligible, HMRC has suggested that they will use average profits from tax returns over 3 years, 2016-17, 2017-18 and 2018-19. The scheme will be open to those who earn the majority of their income through self-employment and who have profits of less than £50,000.
To be eligible for this scheme, you must meet the following criteria: Be self-employed or a member of the partnership.
- Have lost trading/partnership trading profits due to COVID-19.
- Have filed a tax return for 2018-19 as self-employed or a member of a trading partnership (those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so).
- Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021.
- Have trading profits of less than £50,000 and earn more than half of your total income from self-employment.
HMRC will use their existing database information to check eligibility and make contact with you once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank accounts. HMRC is urgently working to deliver the scheme, with grants expected to be paid out by the beginning of June 2020. Further guidance on this scheme is available here on the HMRC website.
Universal Credit or Employment Support Allowance:
If you have coronavirus or have been advised to self-isolate and are self-employed, you can make a claim for Universal Credit (UC) or new style ‘Employment and Support Allowance.’ If you meet the above criteria, support is payable from day one of sickness (instead of day 8, as per normal regulations). You can begin an application by visiting the gov.uk site here.
Income Tax Deferral:
Income tax payments for self-employed workers normally due in July 2020, will now be deferred to January 2021 under the ‘Self-Assessment’ system. This will happen automatically, so there are no steps you need to take to access this deferral. There will be no penalties or interest for late payment in the deferral period, and HMRC has also increased their ‘Time to Pay’ offer to all firms and individuals who are in temporary financial distress and have outstanding tax liabilities, as a result of COVID-19.
We hope this information has proved useful to you, but it’s also worth noting that there are a number of additional government support measures in place, regardless of whether you’re an employee or self-employed. Please ensure you’re keeping up to date with all the latest gov.uk advice, here.
The Kapten team