On Thursday 26th March 2020, the Self Employment Income Support Scheme was launched providing additional help for many freelancers, sole traders and workers in the ‘gig’ economy. The support has been met with mixed reactions owing to the number of self employed individuals who will not be eligible to apply for the grant and who are left only with the option to apply for Universal Credit (UC).
So who is eligible and how do they apply? We provide an overview and further details about the scheme below:
Self employed workers, freelancers and partnerships who:
have submitted their 18/19 tax return
traded during 19/20
- intend to continue to trade in 20/21
- have lost profits/trade due to COVID-19
- Anyone who has self employed earnings for 18/19 and have not yet filed their tax return. To benefit from the scheme, they must do so before 23rd April 2020 to become eligible, subject to the scheme criteria above.
- Eligible persons must have taxable profits below £50,000 (this is after all expenses have been deducted and as shown on your tax return calculation) and
- Earn more than 50% of their income from self employed work
- A grant of 80% of taxable profits will be paid up to a maximum of £2,500 per month
- The grant is calculated using:
- the last three years of trading profits, dividing this by 3 and then by 12 to provide a monthly average or
- trading profits from any single tax return submitted between 16/17 – 18/19, dividing trading profits by 12
- HMRC will be contacting all eligible individuals directly.
- Payments are expected to be made for 3 months in full, by June 2020
- The grant will be classed as taxable income and included in the 20/21 tax return
Those who are eligible for the scheme can in addition apply for Universal Credit (UC) and continue to without affecting their eligibility for the grant.
- the Coronavirus Business Interruption Loan Scheme (CBILS);
- for sole traders who employ staff the Coronavirus Job Retention Scheme (CJRS), covering 80% of employee wage costs;
- deferment of ‘on account’ self assessment payments due on 31st July 2020;
- deferment of VAT payments for the next quarter.