Yesterday, Chancellor Rishi Sunak unveiled the government’s Self-Employed Income Support Scheme to help aid the self-employed during the Coronavirus crisis. Whilst discussing the scheme, he said:
"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."
Through the scheme, various things are being done to help the 3.8 million who are self-employed, including:
Income Tax Deferral – HMRC has extended the self-assessment payment deadline for all. In fact, the deferral also applies to self-assessment taxpayers too. The July 31 deadline has now been postponed until January 31, 2021, so the self-employed will benefit from an additional six months to make the payment and there will be no interest or penalties for late payment either.
The deferral is optional and available automatically. You do not need to apply. Those that are still able to pay their second self-assessment should still do so, but for those struggling due to the COVID-19 outbreak, the income tax deferral c essentially provide temporary working capital for the self-employed.
Taxable Grant – Worth 80% of average profits, up to a cap of £2,500 a month, self-employed workers will be able to access a monthly grant to help battle the loss of earnings due to Coronavirus for the next three months. If eligible, you will receive the grant in one instalment which will hopefully be at the beginning of June. The grant may be extended by the government if they deem it necessary.
To apply, you must:
This is a taxable grant, so you will be expected to declare it on your Self Assessment tax return and you may well have to pay income tax and National Insurance on it.
If you have not yet submitted your Self-Assessment tax return for the tax year 2018-2019, you have until the 23rd of April 2020 to do so. HMRC will use this data to identify whether you are eligible for the taxable cash grant.
You are unable to apply for this scheme currently, but once the government has finalised the process, you will be contacted by HMRC if you are eligible and will be invited to apply online. The application will require you to confirm that you meet the eligibility criteria and if so, you will need to confirm your bank account on the application form so that you can receive the payment once June arrives.
What To Do If You Don't Qualify For The Self Employment Support Scheme?
Unfortunately, if you have recently become self-employed (meaning you set up since April 2019), you will not be eligible as you will not have filed a tax return and as a result, HMRC will not know of your self-employed status.
However, you might qualify to claim Universal Credit and in response to the pandemic, the minimum income floor will be temporarily abolished from the 6th of April. If you are unable to claim Universal Credit, it might be possible to apply for new-style Jobseeker’s Allowance if you paid enough Class 1 National Insurance whilst working as an employee over the past two to three years.
If you are a business owner who pays yourself a salary and dividends through your own company, whilst you are not covered through the Self Employment Support Scheme, you will be able to receive 80% of your salary through the Coronavirus Job Retention Scheme if operating through PAYE.
The government state that this new scheme will cover 95% of self-employed individuals who make the majority of their money through self-employment. To further ease the burden on the self-employed, the government announced that the introduction of the IR35 reforms are now to be delayed by 12 months.
For more SME advice regarding the Coronavirus situation, take a look at the additional resources on our Coronavirus Hub.
1 April, 2020