Covid-19 Self Employment Income Support Scheme
There are around five million self-employed workers in the UK who did not benefit from the Coronavirus Job Retention Scheme. In less than a week after the Job Retention Scheme was announced, the government has put a package together to support the self-employed, after much lobbying on their behalf.
According to the HMRC web-site, the Covid-19 Self Employment Income Support Scheme will allow the self-employed to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next three months. This may be extended if needed.
What little detail there is on the scheme can be found here:
The scheme is not running yet, and the announcement confirmed that the payments would not be made until June.
Whilst the scheme will be welcomed by many self-employed, there is still a minority who will not be entitled to any support through this channel:
- People who haven’t traded long enough to have filled a self-assessment return last year
- People who have made more than £50,000 profit
- People who operate through a limited company.
Another issue with the scheme is that the payment is linked to trading profits. For past self-assessment, many self-employed have attempted to reduce their trading profits to pay as little tax as possible. 80% of the trading profits may not go far enough to provide a replacement income.
For those self-employed in name only, it may be tempting to seek to requalify their contract into a contract of employment to benefit from a better protection. This is where we can help.
If you are self-employed, please talk to your accountant in the first instance to discuss your situation and whether this scheme will be of practical help.
This note does not constitute legal advice on any particular situation you may have.