• Direct cash grant of 80% of profits available to UK’s self-employed workers’ – up to £2,500 per month
• Payments will be back-dated to March 2020 and are scheduled to begin in June, 2020
• This scheme also applies to members of partnerships
The Chancellor, Rishi Sunak, has announced that UK self-employed workers will receive direct cash grants from the government during the coronavirus outbreak. The self-employed will receive up to £2,500 per month in grants for at least 3 months.
Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years. This covers 95% of people who receive the majority of their income from self-employme, according to the chancellor and could affect millions of people.
The grants bring parity with the Coronavirus Job Retention Scheme, whereby the Government has committed to pay up to £2,500 each month in wages to employed workers who are furloughed during the coronavirus outbreak. Unlike the employee scheme, the self-employed can continue to work as they receive support.
Self-employed workers will be able to apply directly to HMRC for the taxable grant via an online form, with the cash being paid directly into their bank account.
Rishi Sunak commented:”Self-employed people are a crucial part of the UK’s workforce who’ve understandably been looking for reassurance and support during this national emergency. The package for the self-employed I’ve outlined today is one of the most generous in the world that has been announced so far. It targets support to those who need help most, offering the self-employed the same level of support as those in work. 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.”
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.
To qualify, more than half of their income in these periods must come from self-employment.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme, which is being designed by HMRC from scratch, will be back-dated to March 2020 and will cover the three months up to May 2020. Grants will be paid in a single lump sum instalment and will start to be paid at the beginning of June. The grants will be taxable, and will need to be declared on tax returns by January 2022.
HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. The self-employed should not contact HMRC now.
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.
The scheme has been designed after extensive engagement with stakeholders including the TUC, the Federation of Small Businesses and IPSE – The Association of Independent Professionals and the Self-Employed.
Before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account
Further information and details of the scheme will be shared shortly by HMRC.