Self-employment Income Support Scheme

3 April 2020

Alongside the Coronavirus Job Retention Scheme for Employees, the government has established a Self-employment Income Support Scheme.

The key points of this Scheme are as follows:

  1. This will provide a taxable grant of 80% of trading profits up to a maximum of £2,500 per month for a three month period (which may be extended if needed).
  2. It is open to self-employed individuals and members of partnerships who: (i) have submitted their Income Tax Self Assessment tax return for the tax year 2018/19; (ii) have traded in the tax year 2019/20; (iii) are trading when they apply, or would be except for COVID-19; (iv) intend to continue to trade in the tax year 2020/21; and (v) have lost trading/partnership trading profits due to COVID-19.
  3. Self-employed trading profits must also be less than £50,000 and more than half of the individual’s income must come from self-employment. This is determined by at least one of the following conditions being true: (a) having trading profits/partnership trading profits in 2018/19 of less than £50,000 and these profits constitute more than half of the individual’s total taxable income, or (b) having average trading profits in 2016/17, 2017/18, and 2018/19 of less than £50,000 and these profits constitute more than half of the individual’s average taxable income in the same period
  4. If an individual started trading between 2016 and 2019, HMRC will only use those years for which they filed a Self-Assessment tax return.
  5. Self-employed individuals will get a taxable grant which will be 80% of the average profits from the tax years (where applicable): 2016 to 2017, 2017 to 2018, and 2018 to 2019. To work out the average, HMRC will add together the total trading profit for the three tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount. It will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into the individual’s bank account, in one instalment.
  6. HMRC will contact individuals if they are eligible for the Scheme and invite them to apply online.
  7. The government is also providing the following additional help for the self-employed: (i) deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020; (ii) grants for businesses that pay little or no business rates; (iii) increased amounts of Universal Credit Business Interruption Loan Scheme.

This content is produced for guidance purposes only and does not constitute legal advice. It should also be noted that the guidance is deliberately narrow and to aid understanding of the new Scheme and its administration.