Coronavirus: All you need to know about the Self-employment Income Support Scheme
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Shaun Davison of Lovewell Blake answers some of the common questions which are being asked following the self-employed support package announcement.
The announcement by the Chancellor on Thursday of a package to support self-employed people brought news of a substantial level of support for the sector – but there are inevitably conditions which need to be fulfilled, and although the scheme is wide-ranging, there will be some who do not qualify.
Who qualifies for help – how is ‘self-employed’ being defined?
The scheme is aimed at self-employed individuals (sole traders) and members of partnerships, and will allow eligible individuals to receive a taxable grant equivalent to 80pc of their trading profits, up to a maximum of £2,500 a month. That figure will be calculated by taking average trading profits across the three years to April 5, 2019, or from the 2018/19 tax year if you have not been trading for three years. Help is limited to those with average trading profits of less than £50,000pa.
Unlike the Job Retention Scheme for furloughed employed workers, the self-employed will be allowed to continue to trade while receiving the grants.
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What about owner-managers of incorporated businesses?
The new scheme is not applicable to this group. They can take advantage of the Job Retention Scheme by furloughing themselves, but they will only receive 80pc of their salary (i.e. not dividend payments), and they will not be able to work at all while they are furloughed.
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What about those whose profits exceed £50,000, or who can’t demonstrate profits before April 5, 2019?
They are not eligible for the scheme. This means there are two ‘cliff edges’: one for those whose profits are just over the £50,000, and one for those who cannot show the majority of their income in the 2018/19 tax year was from self-employment, or who commenced trading after April 5, 2019.
I have no income now – when will payments be made?
Payments will not be made until June, when eligible recipients will receive a back-dated three-month payment. The measures already announced, such as the business interruption loan scheme, deferring VAT and self-assessment payments, may help – but many self-employed people will be facing a tough couple of months if their income has dried up.
Do I need to do anything to apply?
If you haven’t yet submitted your 2018/19 tax return, you have until April 23 to do so, otherwise you won’t be eligible. If you do qualify, HMRC will contact you and ask you to fill out an online form to apply,
So you don’t need to do anything yourself at this stage. This is the perfect situation for scammers and phishers, so be cautious, and only fill in a form on the official HMRC website.
More details from Lovewell Blake on the Self-employment Income Support Scheme can be found here.