The Chancellor has announced a new self-employed income support scheme, to provide further support to the self-employed through the Coronavirus pandemic.
PKF Francis Clark set out below the headlines and details available so far…
Who is the scheme available to?
The scheme will be available to the self-employed or a member of a partnership with average annual trading profits of less than £50,000, provided they were in self-employment during the 2018/19 tax year. No support will be available for those who have commenced trading from 6 April 2019.
For those who are late in filing their 2018/19 tax return, they have four weeks from 26 March to file their return and qualify for the grant.
What support is available and how will the grant be calculated?
Broadly speaking, the support available will look to mirror the Coronavirus Job Retention Scheme for employees and will provide a taxable grant worth 80% of the individual’s average monthly taxable profits over the last three years, limited to £2,500 per month. Where the self-employed individual has less than three years of trading, the payment will be averaged over the period they have been trading.
How long will the scheme run for and when will the grant be received?
The scheme will run for three months, backdated to March and running initially until June, with the ability to extend if the Chancellor believes it is necessary. HMRC are aiming to make payments to individuals in June 2020 and sooner if possible. They will contact individuals directly where they are eligible for the support. The individual will then need to complete a form to confirm they are still trading and provided they qualify, the individual will at that point receive the three months payment backdated.
What support is available to the self-employed immediately?
The Chancellor recognised the delay there will be to the payment being made and has indicated that as an interim measure the self-employed can access the business interruption loan scheme, universal credit and are able to defer payments due for VAT and the upcoming July payment on account for self-assessment.
A sting in the tail for future contribution rates
The Chancellor made an observation as part of the announcement that the support available to the self-employed is now on a par with the support available to employees. Going on to suggest that when normality returns, there may be the need to revisit the disparity between the national insurance contributions between the self-employed and employees.