Coronavirus – Clarification on help for the self-employed
Help for the self-employed
The Chancellor announced this evening that self-employed individuals will receive cash grants to help them during the coronavirus outbreak. The announcement brings parity with the Coronavirus Job Retention Scheme, announced by the Chancellor last week, where the Government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the outbreak.
Does this apply to those running limited companies?
Those who operate through a limited company are not eligible for the scheme. Though it has been confirmed that such individuals are eligible for the Coronavirus Job Retention Scheme if they operate a PAYE scheme. Further information on furloughing to follow.
Not all self-employed people will be eligible
The Scheme will only be open to those who reported trading profits of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from the last three years (2016-17, 2017-18 and 2018-19). Additionally, the Scheme is only open to those who earned more than half their income from self-employment. Those who have not traded for the last three years will not be eligible for the Scheme.
If you are eligible for self-employed help, you don’t need to do anything right now
Those eligible for the scheme will be contacted by HMRC and invited to complete a simple form to make use of the scheme. At this moment, there is little information on what this form will look like (other than it will be online) and no clear mechanism to appeal a decision of HMRC to determine a taxpayer ineligible.
The scheme will provide grants to the self-employed, rather than loans
Self-employed individuals will receive a taxable cash grant worth 80% of their average monthly trading profits, as reported through self-assessment, over the last three years. As with the Coronavirus Job Retention Scheme, the payments will be capped at £2,500 per month.
The grants won’t be available until June
Grants made under the scheme will be paid in one lump sum in June. Eligible individuals can continue to trade and do not need to stop work to receive the grant. Those unable to trade and are struggling financially are advised to apply for Universal Credit, and to approach their mortgage provider for a three-month mortgage holiday.