Self-Employed During COVID-19? Support Available and How to Claim
We have already discussed through our blogs the support available to employees and limited companies. Here we’ll be looking at key government support for the self-employed.
Naturally, there is some overlap with our support for limited companies blog, so we’ll discuss this where it applies.
The following is guidance specific to England, but Wales, Scotland and Northern Ireland have similar support available.
We’ve linked their specific support sites at the end, but as with our limited companies blog, we’d suggest you read on as it can give an indication of what you could be entitled to.
The Coronavirus Self-Employment Income Support Scheme
This scheme will provide a taxable grant of up to 80% of your trading profits, capped at £2,500 per month. It is available for up to 3 months.
You will not be able to receive any immediate support, as payment is due in early June.
Universal Credit may be an option in the meantime but bear in mind the grant should be recorded as part of your income for your Universal Credit application.
Are you eligible for this scheme?
You can claim if you meet the following criteria. You must:
Be self-employed (includes if you’re a member of a partnership).
Have submitted your self-assessment tax return for 2018-19.
Be trading when you apply (or would be if not for Coronavirus).
Intend to continue trading in the current tax year.
Have lost trading profits due to Coronavirus.
Please bear in mind that once calculated, if your average trading profits exceed £50,000 you won’t be eligible.
Also, if your trading profits don’t make up more than half of your total income you won’t be eligible (e.g. if you are employed and self-employed and you’ve earned 2/3 of your income through employment).
How is it calculated?
HMRC will calculate your average trading profit over the last 3 tax years: 2016-17, 2017-18, and 2018-19.
This means trading losses would also factor into the average.
If you don’t have 3 years of self-assessment tax returns, the amount will be calculated on your returns from the last 2 years (2017-18, 2018-19). Where you don’t have 2 years, it will be based only on your 2018-19 return.
HMRC will take the average as per the above and the grant would be 80% of this, divided by 12 (to work out the monthly equivalent). If that exceeds £2,500 then £2,500 will be the cap.
Remember, it will be paid into your bank as a single instalment.
Also, if you’ve yet to submit your self-assessment tax return for 2018-19, it must be done by April 23rd or you will be unable to claim.
There are additional rules that cover where you’ve been paid for work through loans or other credit, or are a farmer claiming averaging relief. Please check the full guidance here as it may affect eligibility, entitlement and when to file your self-assessment.
How do you claim?
You can’t – yet. You will be contacted by HMRC by mid-May if you are eligible and then invited to apply online.
If you’re unable to claim online, HMRC will provide an alternative method, but no further details have been released about this yet.
Beware: If you receive texts, calls or emails claiming to be from HMRC and asking you to click on a link, offering financial help, tax refunds and asking you for personal information, it’s highly likely to be a scam.
When you claim in the future, HMRC have said it will be via the normal gov.uk online service (i.e. not through a link provided in an email).
There are some very opportunistic financial scams currently circulating and trying to exploit the situation. We have written about some of these in another blog.
From what we know so far, the steps for claiming will look like this:
HMRC will contact you by mid-May, inviting you to apply if you’re eligible.
You’ll apply online (or via an alternative application method (as yet unknown)).
Your claim and what you’re entitled to will be assessed.
You will be contacted to tell you of your entitlement and for details of where to pay.
Other Support Available to You
You may also be able to claim from some of the schemes that we have previously written about. We’ll provide a brief overview as to what the schemes could provide, but we would recommend checking our limited company blog for a more comprehensive picture.
The Coronavirus Job Retention Scheme
This provides a grant covering 80% of an employee’s usual monthly wage costs, up to £2,500 per month. It also covers employer national insurance and pension contributions
Business Support Grants
Eligible businesses could receive £10,000 or £25,000, potentially per premises. It’s based on the rateable value of the premises, or the industry you work in combined with the rateable value.
Business Interruption Loan Scheme
This provides access to loans, overdrafts, invoice finance and asset finance with no upfront cost and lower repayments (where accepted).
There will be support we haven’t covered here. We’ve focussed on the main schemes available.
The situation continues to evolve, so policies and support available may change, like the recent changes we’ve seen to The Coronavirus Job Retention Scheme.
As always, try and use official government sources to ensure you access the most up-to-date and accurate information.
If you need any advice or guidance, we’ll be here to help and you can contact us here.