Support for Self-employed - Updated 27 March 2020

Following the recent announcement for those self-employed, we set out below the following details.  

However, we must stress that the detailed guidance has not yet been released, and we are therefore unable to provide clarity into how much you will entitled to. This is for a number of reasons, as the term “trading profits” has yet to be clarified, and consideration would need to be given to those you have made losses, claimed capital allowances and so on.

Directors- Please note it is a common misconception that small company director/shareholders are “self- employed”, they are not, please see our dedicated guidance for directors.

We fully appreciate your concerns, and as soon as we have further information, we will of course let you all know. Please read the guidance below and only contact us if you have a concern, we will be dealing with claims in due course when the system is in place.

How much will I get?

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

  • This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
  • Support will be based on 3 years average profits up to the 2019 return.
Who will qualify?

You can apply if you’re a self-employed individual or a member of a partnership and 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
  • have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not yet submitted your 2019 return (its overdue), you have until 23 April to make a late return which will be considered.

When will the grant be paid?

Its expected the grant being paid in full towards the end of June for the 3 month period.

Will it be taxable?

The grant will also form part of any taxable profits for the 2020/21 tax year, so may in effect be taxed.

How can I apply?

You cannot apply for the scheme now, there is no need to contact HMRC.

Cashflow while awaiting grant?

Since the self employed will get nothing for 3 months they must consider cash flow until then: mortgage debt deferral, VAT deferral, July tax payment on account deferral , possible loans etc, it may be advisable to make a universal credit claim if your household qualifies while you await any grant.

How will this affect future tax?

The chancellor warned that in the future the self employed may pay tax in line with the employed due to the level treatment in this crisis.

Link to government guidance:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme