Announced on 26 March 2020, the scheme offers some support to self-employed workers affected by COVID-19. The details are still being finalised by the government, but here is what we know so far:
- The scheme allows self-employed individuals and partners in partnerships to claim a taxable grant of 80% of their trading profits, up to a maximum of £2,500 per month. To begin with, the scheme will run for 3 months.
- To qualify, you must:
1. Have submitted your self-assessment tax return to HMRC for 2018/19 (or if not must do so by 23 April 2020)
2. Have trading profits of less than £50,000 and these profits must make up more than half of your total taxable income
3. Have traded in the 2019/20 tax year
4. Be trading as a self-employed individual/partner when you apply, or would have been if it wasn’t for COVID-19
5. Intend to continue to trade as such in the tax year 2020/21
Have lost trading profits as a result of COVID-19
- When assessing the £50,000 limit in b) above, HMRC will look at the trading profits on your 2018/19 tax return AND your average trading profits for the last 3 tax years, i.e. 2016/17, 2017/18 and 2018/19. If your profits under either measure meet the criteria (i.e. less than £50,000 and more than half of total taxable income) then you should qualify for the scheme.
- The grant will be calculated as 80% of average trading profit from the last 3 tax years, i.e. 2016/17, 2017/18 and 2018/19, or the period since becoming self-employed, if shorter. There is a cap of £2,500 per month.
- This amount will be paid directly into your bank account in one installment, most likely in June 2020.
- Please note that it is not possible to apply for the scheme yet – HMRC will contact eligible individuals and invite them to apply online.
- The grant received will be subject to Income Tax and also counts as income for the purposes of tax credits.
Finally, self-employed individuals are now able to apply for Universal Credit in full https://www.gov.uk/universal-credit.