As promised, Rishi Sunak has today announced the Government’s package to support the self-employed while the country is on “lockdown” due to the spread of the Coronavirus, with a view to equalising the support available to the self-employed and Employed. Rishi described the package as “one of the most generous in the world that has been announced so far and targets support to those who need help most”. The package is summarised below:
- Self-employed people will be paid a taxable grant of 80% of their average monthly profits, which will be capped at £2,500 per month, for a minimum of three months.
- The package is only available to those who are self-employed and have submitted a tax return for 2018/19 (those who have missed the deadline will get an extra four weeks from today’s date to submit their tax return) and those who have average profits of up to £50,000. They will look at the last three tax return years where these are available, or if the self-employment commenced less than three tax years ago, they will look at the years that are available. Those that became self-employed from 6 April 2019 onwards will unfortunately not qualify for the grant.
- To qualify more than half of their income must come from self-employment.
- The scheme will also be available for partners in partnerships
The Government have asked individuals not to contact HMRC directly as HMRC will be contacting eligible taxpayers to invite them to apply for the grant, and supplying the necessary form to do this. The grants will be paid in one lump sum from the beginning of June and will cover the three month period from March to May.
This of course does still mean that self-employed individuals may see a cashflow shortfall until the grant is paid in June, but self-employed individuals will still be able to carry on benefitting from Universal Credit, income tax payment on account and VAT deferrals, Time to Pay arrangements with HMRC and the Coronavirus Business Interruption Loan Scheme. They may also consider speaking to their banks to defer mortgage payments for 3 months. Details of these measures can be found in our previous article HERE
Individuals and partnerships who are also employers can also make use of the Coronavirus Job Retention Scheme, also covered in our earlier article, we are expecting further guidance on this to be issued tonight. Once available we will provide updated information on this measure.
Rishi did hint that with the support to self-employed being on an even-footing to those that are employed, they would potentially be looking at equalising the National Insurance paid by both in future (currently employees primary rate of National insurance is 12% compared to 9% paid by the self-employed). We don’t expect a rise in National Insurance while the country is recovering from the impact of Coronavirus, but we wouldn’t be surprised if this is included in a future Budget announcement.
Please see our previous article issued on 24 March 2020 for help available to businesses and individuals. Please do not hesitate to get in touch with us if we can be of any assistance with regards to self-employed or anything else that you may need help or advice on.
