How To Claim Help From The Coronavirus Self-Employment Income Support Scheme
Details of support for freelancers and contractors have been issued by the Government.
Chancellor Rishi Sunak, has announced an emergency support package to protect Britain’s 5 million self-employed workers.
You can use this scheme if you're self-employed or a member of a partnership and have lost income due to coronavirus.
How much will you receive?
The maximum payment is £2,500 per person, per month.
The government will provide up to 80% of your self-employed earnings (up to the maximum £2,500 per month).
How do I qualify?
The government will review the self-employed income on your last 3 tax returns. If you haven't been self-employed for 3 years, you can still claim as long as you filed as self-employed for 2018-19.
To be eligible, you must have annual profits (self-employed income less expenses) of less than £50,000 a year on average over the last 3 years, according to HMRC.
That you have lost income due to the coronavirus.
Are still self-employed and will continue to be into the 2020-21 tax year
(6 April 2020 to 5 April 2021).
More than half your income comes from being self-employed.
How do I apply?
HMRC have advised you should not contact them now.
The government will use existing information to check potential eligibility and invite applications once the scheme is operational.
The grant will paid directly to your bank account - they anticipate this will start in June 2020, with 3 months being paid as a lump sum and then monthly amounts.
If you have not submitted your 2018-19 tax return, you now have 4 weeks to file your return and become eligible for this scheme.
Will these grants be repayable?
The chancellor has confirmed that the grants will be fully taxable and so you will need to include these as income on your 2020-21 tax return as income.
Based on 3 months grant being paid in June 2020, at £2,500 per month, the total taxable income would be £7,500.
The income tax on that as a basic rate taxpayer would be £1,500 and National Insurance of £675 - total tax of £2,175 - plus there will be student loans to pay if you are in repayment - these will all be due by 31 January 2022.
The government has been trying to tax self-employed individuals at the same rate of National Insurance as employees for years now and as part of his speech the chancellor hinted that he would be looking to create parity - it may be that NI rates for self-employed are raised from 9% to 13% as a method to help fund these grants.
It may also be that the grants are repayable if your self-employed profits for 2020-21 are more than £50,000 or more than your average for the last 3 years - the government has yet to provide guidance on that
I run my own company as self-employed
HMRC have confirmed you will not be eligible for the self-employed coronavirus help if you run your self-employed income through a company and take salary and dividends.
In that case you will need to apply for the coronavirus job retention scheme.
How long will the grants be paid for?
The chancellor has guaranteed 3 months until June 2020. The government will then review the scheme in light of the impact of the pandemic and decide if an extension is necessary.
Support available now
1 - Deferral of Self-Assessment payment
The Self-Assessment payment on account, that is due to be paid to HMRC by 31 July 2020 can now be deferred until 31 January 2021
This is automatic, you don't need to apply. No penalties or interest will be added as long as the payment is made by January 2021.
2 - Claiming Universal Credit
The levels have been increased to £94.25 per week - you can check eligibility here
You can claim both the grant and Universal Credit
3 - Deferral of VAT payments
All VAT registered businesses are eligible and the VAT payments are deferred for the next 3 months.
4 - Business Interruption Loan Scheme
Loan scheme for small businesses with funding of up to £5 million.
The Government will also cover the first 12 months of interest payments and any fees, so there are no upfront fees and lower monthly repayments.
Summary
The first step is to check your profits for the last 3 years to see if you qualify for the grant - are they under £50,000 on average per year?
Use the Universal Credit eligibility button above to see if you can have any immediate financial support.
If you haven't filed your 2018-19 tax return, file now if you are eligible for the grant.
These measures cover the next 3 months and it is likely that further measures will be provided. In that case, if your 2019-20 income is under £50,000, file your 2019-20 tax return early to make sure you are eligible to claim the next round of grants.