COVID-19: Package of support for the self employed

27 March: Grants of up to £2,500 per month are to be made available for the self-employed during the coronavirus pandemic, but the scheme is unlikely to be operational until June.

Following measures to help businesses and employers through the coronavirus crisis, the Chancellor has announced the creation of a scheme to protect the incomes of self-employed individuals and partnerships. 

The Self-employed Income Support Scheme has similarities to the coronavirus job retention scheme, in that it offers monthly financial support of up to £2,500. However there are a number of differences, including that the scheme isn’t open to anyone who started self-employment after 5 April 2019 and in that is not likely to be operational until June and payments will be backdated. 

The Chancellor also confirmed that the government intends to start a discussion on the different tax treatment of the employed and the self-employed, something ICAEW’s Tax Faculty has suggested in the past.

The key rules for the self-employed Income Support Scheme:

• Support will be 80% of monthly profits, averaged over three years (2016/17, 2017/18 and 2018/19)
• It will be capped at £2,500 per month for three months (ie, up to £7,500 in total), but this may be extended. 
• It is only available if average annual taxable earnings are below £50,000.
• The majority of income has to be from self-employment.
• Unlike furloughed employees, the individual can continue to operate the business.
• Those who started self-employment after 5 April 2019 are excluded.
• HMRC will contact those eligible. 
• HMRC is allowing those who have yet to file their tax return for 2018/19, which was due on 31 January 2020, an additional four weeks to file and get up to date.
• The scheme will be available from the beginning of June 2020, effectively back-dated three months to 1 March 2020, and paid in one lump sum.

Preliminary guidance has been published by HMRC, and ICAEW's Tax Faculty will be providing more detailed information in the coming days.