While there has been a lot of activity around help for SMEs with the introduction of CBILS, there has been nothing proposed for the self-employed – the directors and sole traders of one-man operations. Until now that is.
The chancellor of the exchequer, the Rt. Honourable Rishi Sunak, has announced new measures to come to the aid of the self-employed. However, first payments will not be available until June and not all self-employed individuals will be eligible to receive aid.
- What’s the offer?
- Am I eligible?
- How do I get it?
- Is other support available?
What’s on offer?
The much-needed economic help to the self-employed who find themselves unable to continue trading as a result of the Covid-19 Coronavirus pandemic will receive a direct cash grant of 80% of their profits, up to a ceiling of £2,500 per month.
This support package, known as the Self-Employed Income Support Scheme (SISS) is designed to support and protect businesses and individuals throughout the coming months of the Coronavirus crisis.
The grants will be available to cover at least 3 months. Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years. This covers 95% of people who receive the majority of their income from self-employment. It’s important to remember that the grant is taxable.
Am I eligible for the Self-employed Income Support Scheme?
The scheme will be open to those 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 your income in these periods must come from self-employment.
Only those who are already in self-employment and meet the above conditions will be eligible to apply.
For more details you can visit the HMRC website.
You will be able to apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be if it weren’t for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
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. It has been confirmed that the single director of a company is able to furlough themselves.
How do I get the SISS grant?
The grant scheme is not yet open to applications. HMRC will identify eligible taxpayers and you will be contacted directly with guidance on how to apply if you are eligible.
Self-employed people who are eligible for the new scheme will then be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into people’s bank account.
You should not contact HMRC now. HMRC will use existing information to check your potential eligibility and invite applications once the scheme is operational.
Is other support available?
This brings parity with the Coronavirus Job Retention Scheme, announced by the Chancellor last week, where the Government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the outbreak.
The government is also providing the following additional help for the self-employed:
- deferral of Self-Assessment income tax payments due in July 2020 until January 2021
- deferral of VAT payments due from 20 March 2020 until 30 June 2020. Businesses registered for VAT therefore have until 31 March 2021 to pay any VAT deferred as a result of this announcement.
- you do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of their VAT return
- grants for businesses that pay little or no business rates and receive Small Business Rate Relief or Rural Rate Relief
- increased amounts of Universal Credit
- Business Interruption Loan Scheme
For help and advice on the availability of financial support for your business please call us on 0203 327 0567 for a free 15-minute problem-solving chat or email [email protected]