The advice given in this article is correct as of 27th March 2020. The situation with Coronavirus is developing rapidly, so please do check our COVID-19 Insights Hub for the latest updates.
On 26 March 2020, the Chancellor announced help to support self-employed workers who are facing financial difficulties as a consequence of the coronavirus (COVID-19).
The new measures available appear to substantially mirror the 80% salary support given to furloughed PAYE employees under the Coronavirus Job Retention Scheme, which was announced by Rishi Sunak, on 20 March 2020.
Similarly this new scheme will allow self-employed workers to claim a taxable grant worth 80% of their average trading profits over the past three years up to a maximum of £2,500 per month for the next 3 months. This government has said the scheme may be extended if needed. Along with the Chancellor’s announcement, the government has published guidance on who can use the scheme.
The government guidance states the scheme is for self-employed persons or members of a partnership who have been adversely affected by the coronavirus (i.e. lost income).
You can apply if you’re a self-employed individual or a member of a partnership and have average trading profits of up to £50,000. The government has set conditions to be met, it says in order to minimise fraudulent claims and so only the genuinely self-employed will benefit. This includes such trading profits must amount to more than half of total taxable income. This scheme cannot be used for persons who began trading from 6 April 2019, which will leave some individuals exposed.
Mr Sunak said those who are eligible will be contacted by HMRC and they will need to complete an online form. Provided they qualify, the individual will receive payment into their bank account. Mr Sunak admitted that the scheme to support the self-employed may not be available to access until early June. In the meantime, interim measures that can be accessed include the business interruption loan scheme, universal credit and deferring payments for self-assessment.
It is notable that higher earners making profits above £50,000 will lose out. A further sting in the tail was the Chancellor suggesting the tax treatment of self-employed persons may be reviewed after the pandemic crises is over. He said it was ‘harder to justify’ their more favourable tax treatment as the state had stepped in to treat them as generously as employees.