The UK Government has announced a package of support measures for the self-employed.
Our experts look at the key points of the scheme in this article.
Who does the self-employed support scheme cover?
Sole traders or members of a partnership are eligible for the scheme. The scheme does not extend to those who work through their own companies and pay themselves through PAYE.
How does the scheme work?
The scheme makes provision for a one-off taxable grant equal to 80% of the profits of the self-employed individual or partnership, up to a cap of £2,500 per month. The grant is available for three months and will be paid in one lump sum, with the first payments being made from the beginning of June. The taxable grant is available if:
- Your self-assessment tax return has been submitted for the 2018/19 tax year;
- You traded in the 2019/20 tax year;
- You are trading when you are invited to apply, or would have been trading but for the impact of COVID-19;
- You intend to be trading in the 2020/21 tax year;
- You have lost trading/partnership profits due to COVID-19;
- More than half your income comes from self-employed work; and
- Your trading profits are less than £50,000 in 2018/19, or you have an average trading profit of less than £50,000 for the 2016/17, 2017/18 and 2018/19 years.
The effect of the above eligibility criteria is that if you have recently started a new business as sole trader or a partnership and do not have a full year’s trading history, you will not be eligible for this scheme.
However, there is other government help available.
What other help is there for the self-employed?
- Income Tax paid under the self-assessment regime can be deferred until January 2021
- VAT payments can be deferred until 30 June 2020
- The introduction of “time to pay” arrangements, which allows you to make arrangements with HMRC to pay any outstanding tax
- The self-employed can access Universal Credit at a rate of £94.25 per work which is equivalent to statutory sick pay
- Access to the Coronavirus Business Interruption Loan Scheme
For more information on these initiatives please see our COVID-19 Business Fact Sheet.
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