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COVID-19: Government support for the self-employed

Update: The Self Employment Income Support Scheme is now being extended until 19 October 2020. A second and final grant will be able to be claimed online from 17 August 2020.

On 29 May 2020, it was announced by the Chancellor of the Exchequer, Rishi Sunak, that those who are eligible under the Self-Employment Income Support Scheme (SEISS) will be able to apply for a final taxable grant from August 2020.  In order to fall in line with the reducing contribution to the furlough scheme, this grant will be paid in a single instalment and be based on 70% of average monthly trading profits over 3 months (not 80%, as previously) up to a maximum of £6,570.

The eligibility for the second grant is calculated in the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020. Adversely affected means the same as under the first grant and might include if you’re unable to work because you are shielding, self-isolating, on sick leave related to coronavirus and/or have caring responsibilities because of coronavirus. It could also be if you’ve scaled down, temporarily stopped trading or incurred additional costs because coronavirus has meant your supply chain has been interrupted, the number of customers or contracts have reduced, your staff cannot attend work or if you had to buy protective equipment so you could trade following social distancing rules. You can claim for this second grant even if you did not make a claim for the first grant.

How is the government helping the self-employed?

Below is an outline of the assistance that the self-employed can expect to receive.

The self-employed income support scheme will take a while to take effect and for the self employed to receive the money, which may not assist with short term cashflow, but will be welcomed nonetheless by the self-employed who until 26 March 2020 had not been offered much by way of support and it is estimated that around 95% of the UK’s self employed will be assisted by this scheme.

How does the self-employed income support scheme work?

All eligible self-employed people under this scheme will be contacted by HMRC directly and having completed an online form will receive a payment directly into their bank account.

The first payment was a taxable grant worth 80% of average monthly income, capped at £2,500 per month for at least 3 months, covering March, April and May and will be paid in one lump sum. Whereas the second payment is based on 70% of average monthly trading profits over 3 months (not 80%, as previously) up to a maximum of £6,570.

How will the support be calculated?

Income will be calculated by taking the average of income over the last three years.

The scheme is only available for self employed people with trading profits 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. Over half of the worker’s income must come from self-employment to qualify under this scheme.

The self-employed individual claiming the grant must have submitted a tax return for 2019 (or do so within 4 weeks of 26 March 2020).

How does this compare to the support given to the employed?

Self-employed people can claim these grants and continue to do business unlike employees on furlough leave, under the comparable Coronavirus Job Retention Scheme, where employees have to remain at home and cannot continue to earn whilst receiving 80% of their wages up to £2,500 per month.

What about those who pay themselves a salary through their own company?

Individuals who pay themselves a salary and dividends through their own company are not covered by the self-employed income support scheme but will be covered for their salary by the Coronavirus Job Retention Scheme, if they are paid through PAYE schemes.

What else can the self-employed access for support?

Self-employed individuals can also benefit from other measures introduced by the government considering the coronavirus pandemic, if they qualify, such as the increase in Universal Credit, income tax and VAT deferrals, support for renters and a three-month mortgage holiday.

If you require further guidance on the assistance available as a result of COVID-19, visit our support hub for businesses.


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