In the words of Boris Johnson during the difficult days of COVID-19 “we will do whatever we can to support the self-employed, just as we are putting our arms around every single employed person in this country”.
For a nation of entrepreneurs with 5 million self-employed people amounting to 15% of the workforce, these words were always going to be well received together with Rishi Sunak’s reassurance that they were not forgotten.
Following the announcement of the Coronavirus Job Retention Scheme, there was an understandable outcry over the lack of protection available to self-employed workers hit by the COVID-19 outbreak. At a time of crisis when we are in this together, the divide between protection for the employed and the self-employed hit hard.
It was always going to be the bigger task to calculate how protection might look for the self-employed where individuals have potentially irregular and intermittent income.
The government has set up the Coronavirus Self-employment Income Support Scheme (SISC), which applies to individuals who are either self employed or members of a partnership.
Eligible individuals will be able to claim a taxable grant worth up to 80% of profits for the next three months, up to a maximum of £2500 per month (to be paid in one lump sum starting in June but backdated to March).
Applications for the scheme are not open yet. Eligible individuals will be contacted directly by HMRC to apply next month.
Here is some more detail.
Who can apply?
– is self-employed or a member of a partnership where more than half of income comes from self-employment;
– has lost trading/partnership trading profits due to COVID-19;
– had trading/partnership trading profits worth less than £50,000 (either in 2018-19 or as an average in 2016-17,2017-18, and 2018-19);
– would be trading except for COVID-19;
– intends to continue training this year and next year;
– has traded in the last tax year;
– has submitted their Income Tax Self-Assessment tax return for the tax year 2018-19.
Average monthly payouts are thought to be £940 each month.
Can I benefit from both the SISC and the Coronavirus Job Retention Scheme?
Theoretically, yes. But in practice this is an unlikely scenario if trading profits must constitute at least half of the individual’s income.
If you pay yourself a salary and dividends through your own company, you would not be covered by the scheme.
What about start-ups?
Although a great initiative, the scheme will not be available to those who have set up a business since April 2019 since they will not have filed a tax return, and therefore HMRC will not know of their self-employed status. Also, the scheme requires that the self-employed have been working for themselves for the past two years to avoid fraudulent claims.
The above is accurate as at 16 April 2020. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.