Many self-employed people have emailed me and rung over the last few days concerned at their loss of income.
The Chancellor has now announced the support the Government will be providing for the self-employed. I’m concerned that in the short term there may be some of you who will suffer financial hardship and I’ll be addressing this over the next few days.
In the meantime these are the arrangements:
Self-employed workers will be able to apply for a grant of up to £2,500 a month to help them cope with the financial impact of coronavirus. If you have suffered a loss in income, the taxable grant will be paid to the self-employed or partnerships and be worth 80% of your profits – not revenue.
The money will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest.
Mr Sunak said the grants would be available to people across the UK for at least three months, and longer if necessary.
The Government says in all, 95% of people who earn most of their income as self-employed will be covered.
The grants will be taxable, and will need to be declared on tax returns by January 2022.
At least half your income needs to have come from self-employment as registered on the 2019-20 tax return filed in January, or averaged over the three previous years. Company owners who pay themselves a dividend are not covered.
The chancellor said he can no longer justify, after things get back to normal, that self-employed people pay less tax than the employed.
The Coronavirus Self-Employment Income Support Scheme is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2017-18.
Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.
The government’s new help comes on top of a six-month delay for tax payments through the self-assessment system.
How to claim the help:
- HM Revenue and Customs (HMRC) will use existing information to identify those eligible and will invite applications
- The application will require them to confirm that they meet the eligibility requirements
- It will be paid straight into a bank account, which eligible taxpayers will need to confirm on their application form
- People do not need to contact HMRC now, if they are eligible HMRC will contact them directly
Payments will be backdated to March.