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Coronavirus Self Employment Income Support Scheme

The Government has brought the self-employed into its emergency response to the coronavirus crisis by pledging grants to cover as much as 80% of their earnings during the pandemic.

The scheme will be available to all self-employed workers with trading profits of up to £50,000 per annum, though payments are not expected to start until June 2020.

Unlike the coronavirus Job Retention Scheme where employees are “furloughed” and cannot undertake work while furloughed, the Self-Employed Income Support Scheme allows self-employed workers to continue to trade where possible.

This scheme is available to the self-employed or a member of a partnership who have lost income due to coronavirus.

The scheme allows you to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months (which may be extended, if required).

Those eligible to apply are self-employed individuals or members of partnerships who:

  • have submitted a personal Tax Return for the tax year 2018/19 (tax year ended 5th April 2019);
  • traded in the tax year 2019/20;
  • are trading when you apply, or would be except for COVID-19;
  • intend to continue trading in the tax year 2020/21;
  • have lost trading/partnership trading profits due to COVID-19

Self employed trading profits must be less than £50,000.

Where you have both income from employment and self-employment, to qualify for this scheme, more than 50% of your income must 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 the tax years 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 self-employment commenced between 6th April 2016 and 5th April 2019, HMRC will only use those years for which a Tax Return was submitted.

If you have not yet submitted a 2019 Tax Return, you must do so no later than 23rd April 2020.

Grants, which are liable to tax, will be 80% of the average profits from the tax years 2016/17, 2017/18 and 2018/19 (where applicable).

HMRC will calculate the average of the total trading profits then divide by 3 (where applicable) to establish the monthly amount up to a maximum of £2,500 per month for 3 months.

The grant will be paid directly into your bank account in one instalment.

Applications for the scheme are not yet available. If you qualify for the scheme, HMRC will contact those eligible and invite you to apply online.

After you have applied and HMRC has reviewed your claim, eligible applicants will be contacted by HMRC to tell you how much of a grant you will receive and notify you of the payment details.

Because eligible grants are taxable as income, if you claim tax credits you will need to include the grant in your claim as income.

For information on the scheme, contact Graham Fyfe at graham@fyfemoirassociates.com or Alan Moir at alan@fyfemoirassociates.com