As things change rapidly during the coronavirus (COVID-19) crisis, this guide will be updated regularly to reflect changes in rules and regulations.
On 26th March, UK Chancellor Rishi Sunak unveiled the Coronavirus Self-employment Income Support Scheme (SEISS). If you have lost part or all of your income as a consequence of the coronavirus crisis, the scheme offers you a grant of 80% of your average monthly trading profits. It is paid out as a single payment, covering three months, capped at £7,500 in total.
Update: Applications will reopen in August for what the Treasury has called a “second and final” three month payment. This will cover 70% of average monthly trading profits, paid out in a single instalment capped at £6,570.
Individuals can continue to apply for the first SEISS grant until 13 July 2020.
Last week Sunak revealed that businesses would be able to claim up to 80% of their employees salaries (capped at £2,500 per month) from the UK Government in order to stave off a wave of businesses going bust or workers being laid off.
However, amidst criticism that the self-employed were not included in these measures the chancellor has now been moved to announce this new scheme in the hopes to level the playing field between what has been offered to contracted employees and what’s available to the self-employed in the midst of a societal shutdown that have left many struggling to meet monthly expenses.
To claim as part of the scheme you must:
have submitted a self-assessment tax return for 2018-19
have made a trading profit of less than £50,000 in 2018-19 or average less than £50,000 across the 2016-17, 2017-18 and 2018-19 tax years
Have earned more than half of your income from self employment in either the 2018-19 tax year or across the three previous tax year (2016-17, 2017-18 and 2018-19)
You do not need to have stopped working in order to claim.
You are not eligible for the scheme if:
You have not submitted a self-assessment tax return for 2018-19
Your gross average income from self-employment over the last three tax years is more than £50,000
Even if your net profit is less than £50,000, you will not be eligible unless your gross income is below the threshold.
HMRC will use their existing database of information on taxpayers to identify those eligible. They will then get in touch with relevant prospective applicants with more details.
Once contacted, you will need to fill out an online form confirming your eligibility. The money will then be paid directly into your bank account. There is no need to contact HMRC yet.
Update: The UK Government has announced that HMRC will aim to contact you by mid May 2020 if you are eligible for the scheme and invite you to claim using the online service. Payments will be made by early June 2020.
80% of your average profits or £2,500 a month, whichever is lower. Your average profits will be calculated based on your returns for the 2016-17, 2017-18 and 2018-19 tax years.
If you did not complete tax returns in all of those years, your 2018-19 tax return will be used instead. The average will be calculated by dividing your annual profits by 12. So if you were only self-employed for a few months of the 2018-19 tax year, you will not receive 80% of your monthly income but 80% of your total income spread across 12 months.
The scheme is initially set to run for three months, with grants paid in one taxable lump-sum payment at the beginning of June.
If you can’t wait until June, you may be eligible for Universal Credit. You are also able to defer self-assessment income tax payments due this July until January 2021.
If your average profits from recent tax years are over £50,000 or you did not fill out a tax return in 2018-19, the Chancellor suggested you look at the government’s universal credit scheme and other in-work benefits. This may now be a more viable option for you as there is now no longer a minimum income to the benefit.
Business savings for tax liability (the money you have set aside to for your self-assessment) does not count towards your capital limit (the maximum savings you can have and still be eligible) for universal credit.
You may also be eligible for a business interruption loan or business interruption payment as part of the government’s plans to help businesses tackle the coronavirus crisis.
Compare business loans