In the words of Rishi Sunak this evening, those who are self-employed have not been forgotten during this pandemic, and the Government have now announced additional support to the self-employed.
In the Government's mission to ensure everyone stays at home, they will be publishing detailed guidance this evening; and following last week's announcement of the Job Retention Scheme for furloughed employees, the Chancellor has just announced further measures to support self-employed workers, a new self-employed income support scheme (Scheme).
The Scheme will provide a taxable grant equal to 80% of a self-employed average monthly profits over the last three years (up to a monthly cap of £2,500 per month, in line with the Job Retention Scheme for employees).
Self-employed individuals can continue to work during this time and benefit from the Scheme (unlike furloughed employees, who are required not to work).
The Scheme will be offered for a period of at least three months, but Rishi Sunak was clear that he would offer the Scheme for a longer period if required.
It is considered by the Government that the Scheme, together with other financial support being offered, is the most generous in the world, and they have ensured that the financial support offered is deliverable and fair.
Therefore, to ensure that they can deliver the Scheme, and to ensure that it is targeted at those who need it most, the Government has announced that the Scheme will be offered to:
- those with annual trading profits of up to £50,000;
- those whose majority of income is self-employed;
- those who submitted a self-assessment tax return for 2019.
The Scheme will be administered by HMRC, and access to the Scheme should be available by early June (at which point three months' worth of grant funding will be paid in one go).
All self-employed individuals already registered with HMRC will benefit. The Government also announced that, to ensure those who need it most can access the Scheme, there will be a four week window from today for those who failed to file self-assessment returns by 31 January.
In the meantime, business support loans will be available, as well as the deferral of income tax instalment payments (from 31 July to 31 January) and more generous universal credit rules.
Some 'gaps' in the new Scheme appear to be the difficulty of dealing with those who do not have three years' worth of accounts, and those who are recently self-employed. However, the Chancellor was clear that the Scheme would benefit 95% of those currently self-employed.
Finally, there was indication that there are likely to be reforms to the tax system to level the playing field between employees and self-employed workers.
The support offered to businesses and sole traders by the Government is unprecedented. If you would like to find out more about the additional support being offered, please visit our Covid-19 support page or contact a member of our team.
We also have a dedicated Covid-19 support line should you have any urgent queries or need any assistance.