On March 26th, Chancellor Rishi Sunak set out measures that will see the self-employed receive up to £2,500 per month in grants for at least 3 months. 95% of people who receive the majority of their income from self-employment could benefit from the new Self-Employed Income Support Scheme. It’s the latest in a series of measures introduced by the government to help protect the economy from the outfall of coronavirus.
Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years. This matches the relief on offer under the Coronavirus Job Retention Scheme, after stakeholders pushed for the UK’s self-employed sector to receive enhanced protection during the crisis.
Speaking at his daily briefing, Sunak said: “Together with support packages for businesses and for workers, I am confident we now have the measures in place to ensure we can get through this emergency together.” His announcement came less than 24 hours before the Prime Minister and Heath Secretary Matt Hanncock both tested positive for the virus.
The scheme will be open to those who can demonstrate the following criteria:
- 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.
- More than half of their income in these periods comes from self-employment.
HMRC have said that individuals shouldn’t contact them now as the scheme is currently being designed from scratch and this could delay the process. HMRC will use existing information to check eligibility and invite applications once the scheme is operational. The scheme is expected to be up and running by June, with grants paid in a single lump sum installment covering 3 months.
Those who pay themselves a salary and dividends through their own company won’t be covered by the scheme, but will be covered for their salary by the Coronavirus Job Retention Scheme, providing they are operating via PAYE. HMRC are stressing that in order to qualify you must have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19 by 23 April 2020.
Self-employed individuals and contractors can also benefit from a number of other measures designed to alleviate financial pressure at this time. These include enhancements to Universal Credit, 3-month income tax and VAT deferrals, plus small business grants for those that pay low rates and a business interruption loan scheme. Contractors can take advantage of these grants and reliefs while also applying for the financial aid schemes.
ContractingWise has a range of options to help you keep your contracting career on track, including help with completing your tax returns, setting up or reopening a limited company, or finding an umbrella company to suit your needs. To talk to a member of our team, call: 0203 642 8679