Update to Self-Employed Income Support Scheme

04/06/2020

UPDATE – Announced 29 May 2020

The Chancellor announced that the Self-employed Income Support Scheme will be extended for individuals to be able to make a second claim covering a further 3 months to the end of August, he has stated that this will be the final grant under this scheme.

The value of the second grant has also been reduced to 70% of average profits using the same information as the first grant and will be capped at £6,570.

The first grant is now open for claims to be made and claims for the first grant must be made on or before 13th July 2020.

Applicants for the second grant will need to confirm that their business has been affected by coronavirus. An individual does not need to have claimed the first grant to make a claim for the second grant.

Applications for the second grant will be able to be made from August 2020, the government will be releasing further information regarding the second grant on 12 June 2020.

If you believe that you have been paid too much in relation to the first grant, you must contact HMRC, details of how to contact HMRC will be made soon. Failure to contact HMRC if you know that you have been paid too much may result in a penalty.

If you believe that your first grant was too low from mis-calculation by HMRC you can now ask them to review the grant calculation. You can do this by logging into your Government Gateway portal or contact us and we can contact HMRC on your behalf.

Original guidance

Self-employed individuals will be entitled to receive direct cash grants through a new UK-wide scheme to help them during the coronavirus outbreak.

The package is a taxable cash grant of 80% of self-employed profits capped at £2,500 per month for 3-months, being a capped amount of £7,500 for the grant period. The scheme is currently a temporary scheme but may be extended.

Chancellor Rishi Sunak said: ‘Together with support packages for businesses and for workers, I am confident we now have the measures in place to ensure we can get through this emergency together.’

Eligibility and applying

You can apply if you have

  • submitted your Income Tax Self-Assessment tax return for the tax year 2018-19,
  • traded in the tax year 2019-20,
  • are trading when you apply – or would be 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.

You must also have trading profits of less than £50,000 and more than half of your total income come from self-employment, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.

Grants will be paid in a single lump sum instalment covering all 3 months and will start to be paid at the beginning of June. HMRC will use existing information to check potential eligibility and invite applications the week commencing 11th May, HMRC will inform you how and when to apply and they will assess the amount of the grant that you are eligible for.

If you receive the grant you are still allowed to continue to work, start a new trade or seek alternative employment. The grant does not need to be repaid but is subject to income tax.

How to Know if You are Not Covered – and Other Support

Those who commenced their trade as self-employed from the 6th April 2019 are currently not eligible for the grant.

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.

Therefore, before grant payments are made, the self-employed will still be able to access other available Government support for those affected by coronavirus while the scheme is currently being rolled out, including VAT deferrals, increased universal credit, Business Interruption Loan Scheme and business rates grant schemes.

If you are not eligible for support, there may be other support that you are eligible for, please click here for more information.

Other useful links for the Self-employed

Association of Independent Professionals and the Self Employed

IPSE are running an online Coronavirus Hub to provide the self-employed with the latest updates, Government schemes and practical advice.

Coronavirus Webinars – click here

Latest Advice – click here

Coronavirus FAQs click here

Government Support

The Government website is also offering guidance on financial support, grants and needing time to pay – click here

Prydis

This article was written by Prydis

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