13 May 2020
Chancellor of the Exchequer Rishi Sunak unveiled unprecedented government aid for the self-employed.
There are around five million people who are self-employed and freelance across the UK, and many will be relieved to hear that financial support is on the way to help those impacted by coronavirus.
The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next three months. This may be extended if needed.
The Chancellor said it will cover 95% of the self-employed who make most of their money from self-employment.
You can apply if you’re a self-employed individual or a member of a partnership, and you:
Your self-employed trading profits must also be less than £50,000, and more than half of your income must come from self-employment.
This is determined by at least one of the following conditions being true:
If you started trading between 2016 and 2019, HM Revenue & Customs (HMRC) will only use those years for which you filed a Self-Assessment tax return.
You’ll receive a taxable grant which will be 80% of the average profits from the tax years (where applicable):
To work out the average, HMRC will add together the total trading profit for the three tax years (where applicable), then divide by 3 (where applicable), and use this to calculate a monthly amount. It will be up to a maximum of £2,500 per month for three months. The grant will be paid directly into your bank account in one instalment.
You cannot apply for this scheme – HMRC will contact you if you are eligible and invite you to apply online.
Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details. If you claim tax credits, you’ll need to include the grant in your claim as income.
The Government is also providing the following additional help for the self-employed:
Self-employed people can now access Universal Credit up to a level of £94.25 per week. This rate is equivalent to Statutory Sick Pay for employees. The Department for Work and Pensions is increasingly providing advance payments for people who are self-isolating, which ‘can be in your account within days’, the Chancellor, Rishi Sunak, has announced.
Councils have also been given extra funding to help those most in need, suspending debt collection or helping people pay their rent.
If you are worried about outstanding tax or have financial concerns, ’Time to Pay’ arrangements can be agreed with HMRC, which involve pushing back the time period in which you have to pay your tax.
IR35 – which required self-employed contractors working under a company structure such as an LLP to either operate as a sole trader or join the client’s payroll – has been suspended until 2021.
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NOTE: Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. Although endeavours have been made to provide accurate and timely information, we cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.