Coronavirus: Chancellor unveils self-employed support scheme
26 March 2020: The Chancellor has announced a significant support package for self-employed people affected by the coronavirus outbreak but warned the complexity of building a new system could mean the first payments could be made in June.
Speaking at the government’s daily COVID-19 briefing, Rishi Sunak announced a new Self-Employed Income Support Scheme to support those who work for themselves, calling it “among the most generous and comprehensive packages to support those who are self-employed in the world”.
He announced that the government will pay self-employed people adversely affected by coronavirus a taxable grant worth 80% of their average monthly trading profit over the last three years, up to £2,500 per month, for at least three months (in line with the employed scheme).
The scheme will apply to people who have filed a 2018/19 tax return and late filers will have another four weeks to file (at time of writing a deadline of 23 April 2020). It will not apply to anyone who started trading in 2019/20 ie those that have started a new business in the last 12 months. The scheme will be open to those with trading profits of £50,000 or less, who make the majority of their income from self-employment. Those who trade through a limited company and pay themselves a salary and dividends are not covered but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
HMRC will contact self-employed people eligible to receive financial support by the beginning of June. Using an online form, they can then apply directly to HMRC for the grant, and the tax authority will pay the grant straight into their bank accounts.
First payments in June
The Chancellor stated that due to the complexity of designing a completely new system at pace, the government will be looking to make the first payments “no later than the beginning of June”. Grants will be paid in a single lump sum instalment covering the three months for which the scheme is applicable.
For self-employed people who the Chancellor said “may be struggling now”, most will be able to access the Business Interruption Loan Scheme, and the government has also changed the welfare system so that self-employed people can now access Universal Credit in full. Unlike employed workers furloughed during the outbreak, self-employed workers can also continue working and claim the grants.
Reacting to the measures Nila Khan, Business Advice Manager at ICAEW said: “The key problem here is going to be cashflow, something on which ICAEW members advise on a daily basis. Self-employed individuals may still need to access other measures such as the Coronavirus Business Interruption Loan Scheme and mortgage holidays to get them through the months of April and May”.
ICAEW Chief Executive Michael Izza said: “With a number of other business leaders I had a good meeting yesterday with Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy (BEIS). I am impressed with Government's determination to do what's necessary to protect employment and prosperity, and at the way in which different parts of Whitehall - BEIS, HM Treasury, HMRC, Department of International Trade, DWP and the regulators - are joining up to do that.
“Both the support for the self-employed announced last night and the Job Retention Scheme, the details of which came out today are huge interventions which will do much to sustain confidence in business and society. Of course, serious gaps still remain in the coverage, and some of those will be very hard to address, but ICAEW will continue to flag those up to Ministers and to work with their departments to find, develop and implement solutions.”
In an aside to the measures, the Chancellor also added an observation that once “the ship had been righted” and the UK had come through the worst of the pandemic, the government would look to examine “the inconsistency in the tax treatment of those who are employed and self-employed”.
- Keep up to date with developments on ICAEW's coronavirus hub.