After the government placed the UK under lockdown and unveiled £330bn of government-backed loans for businesses big and small to help them through the coronavirus pandemic, chancellor Rishi Sunak has faced increasing pressure to do the same for self-employed workers.
On Thursday, Mr Sunak finally announced the government’s plans during the daily Downing Street press conference, in which he reassured the self-employed that they had “not been forgotten”.
In the latest step to protect individuals, businesses and the wider economy, the chancellor set out the Self-Employed Income Support Scheme, which he described as “one of the most generous in the world”.
But, what exactly is it, who is eligible and how do you apply? Here is everything you need to know.
What help is included in the Self-Employed Income Support Scheme?
The UK government states that the new scheme will allow people to claim a taxable grant worth 80 per cent of their trading profits up to a maximum of £2,500 per month for the next three months. However, this may be extended if needed.
During the briefing, Mr Sunak said that this will be given to people in one lump-sum payment, and will start to be paid from the beginning of June.
The scheme is expected to pay out an average of £940 per person at a cost estimated by the Treasury at around £3bn a month.
Who is eligible for a grant?
You can apply for a grant if you are self-employed individual or a member of a partnership. However, the government has issued a number of restrictions on applications, meaning that you can only apply if you:
- have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
To be eligible, your self-employed trading profits must also be less than £50,000 with more than half of your income from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- 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 your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will have 80 per cent of their salary covered by the Coronavirus Job Retention Scheme if operating through PAYE.
How much money will people get?
Those eligible for the scheme will get a taxable grant which will be 80 per cent 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 then divide by three and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for three months and the grant will be paid directly into your bank account, in one instalment.
How do you apply for a grant?
Currently, people are unable to apply directly for this scheme. Instead, HMRC will contact anyone that is eligible for a grant and invite them to apply online.
The chancellor said the scheme will cover 95 per cent of self-employed workers who make most of their money from self-employment.
How many people are affected?
According to the latest figures from the Office for National Statistics (ONS), the number of self-employed workers in the UK increased from 3.3 million in 2001 to 4.8 million in 2017.
Approximately one fifth are from the construction sector, with hundreds of thousands more working in the motor trade, professional services, and education.
Original Article ‘Coronavirus: How to apply for a self-employment grant’ By Sarah Young and Published by The Independent
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