27th March 2020
Further to the announcement made yesterday by the Chancellor and following our news item, with the release of further information from HMRC, we can now provide further detail on how the Self Employment Income Support Scheme works.
How much is the relief?
A taxable grant will be awarded per each month, which will be based on the lower of:
This is a grant not a loan so will not be repayable. However, it is taxable income and will also be assessable income for tax credit purposes.
Who is eligible?
This is open to self-employed workers who have taxable profits less than £50,000 for 2018/19, plus over 50% of taxable earnings must arise from self-employed work.
If this condition is not met, then if the average taxable profits for three years between the 2016/17-2018/19 are under £50,000 a trader will be eligible, providing these profits make up over half of their taxable income in the corresponding period.
The trader must also be trading at the time of the application, or they would have been trading had it not been for the coronavirus crisis. In addition, the trader must show they have suffered as a result of the crisis.
Only individuals who have submitted their 2018/19 Tax Return will be eligible. If this has not been submitted yet, an individual has up until Thursday 23 April 2020 to get this submitted to HMRC.
How do I apply?
Enrolment is automatic, HMRC will contact you directly if you meet the qualifying criteria.
HMRC will contact you asking you to complete an online application form, then they will arrange for the monies to be paid direct into your bank account.
This scheme will only be accessed through gov.uk website. If you receive a call, email or text from somebody claiming to be from HMRC who asks you to use a different link, or who asks you to give personal details over the phone do not do so, this is a scam.
When will this be available from?
This scheme is currently being set up by HMRC and should be available from June 2020 onwards.
It has been recognised that this delay may cause a cash flow issue and it has been announced that the self-employed will have access to universal credit in full if they qualify.
Note also, the income tax payments self-employed individuals are due to make in July 2020 has been deferred to January 2021.
It is advised that businesses in need of cash flow make use of other reliefs such as the business interruption loan (more details can be found on our website coronavirus business news feed).
What about directors?
Those who pay themselves a salary and dividends through their own company are not covered by this scheme. However, they may receive money for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. We still are awaiting further guidance on this.
This announcement still leaves potential unanswered questions that need resolving such as:
Detailed guidance on this matter should be rolled out shortly, which will hopefully address some of the concerns raised above. When this has been made available we will let you know.
Please remember we are here to help as much as possible through these challenging times. We will continue to keep you updated as further announcements are made over the coming days.
Links to our other articles.