Yesterday (26th March) Chancellor Rishi Sunak announced a package of support those that are classed as self-employed that have been affected by the coronavirus outbreak.
The new initiative named the “Self Employment Income Support Scheme” has been outlined to protect self-employed workers via cash grants.
The Chancellor has set out plans that will see the self-employed receive up to £2,500 per month in grants for at least three months.
Millions of workers will benefit from the scheme, with those that are eligible being able to claim up to 80% of their average monthly trading profit over the last three years. It will cover 95% of those that receive the majority of their income from self-employment.
Who is eligible?
Cleaners, plumbers, electricians, musicians, engineers, hairdressers and many other self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into their bank account.
The new scheme will be open to self-employed workers with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of their income in these periods must come from self-employment.
To help the government minimise fraud, only those who are already self-employed and meet the above conditions will be eligible to apply. The HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump-sum instalment covering all three months and will start to be paid at the beginning of June.
Individuals are being advised that they should not contact HMRC now. The HMRC will use existing information to check workers potential eligibility and invite applications once the scheme is up and running.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.