Self-Employment Income Support Scheme: your FAQs answered

After what felt like a lifetime for the 4.8 million self-employed workers in the UK, Rishi Sunak announced the Self Employment Income Support Scheme to provide financial support to those who are self-employed during the coronavirus pandemic.   

The scheme has now been extended to provide a second and final grant to those who are self-employed. We have updated this blog to reflect this.

We’ve explained the scheme and answered some of the common queries we have received. 

What are the eligibility criteria of the Self Employment Income Support Scheme? 

You can apply if you’re a self-employed individual or a member of a partnership and you: 

  • have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. 
  • traded in the tax year 2019-20 
  • are trading when you apply, or would be if it wasn’t for the coronavirus 
  • intend to continue to trade in the tax year 2020-21 
  • have lost trading/partnership profits due to COVID-19
  • you carry on a trade which has been adversely affected by the coronavirus (see below for further details)
  • receive more than half of your income must come from self-employment 
  • have trading profits through self-employment, either in the 2018-19 tax year or an average of the active years from 2016-17, 2017-18, and 2018-19, that are less than £50,000.  
Your business could be adversely affected by coronavirus if, for example:
  • you’re unable to work because you:
    • are self-isolating
    • are on sick leave because of coronavirus
    • have caring responsibilities because of coronavirus
  • you’ve had to scale down or temporarily stop trading because:
    • your supply chain has been interrupted
    • you have fewer or no customers or clients
    • your staff are unable to come into work

If you started trading after 6th April 2019, you are not eligible to benefit from the Self Employment Income Support Scheme. 

I fit the criteria; how much am I entitled to?

For the first grant, which you can apply for until 13 July 2020:

You will get a taxable grant equivalent to 80% of your average monthly profits, covering three months. HMRC will work out a monthly average based on the annual trading profit and then calculate the grant payment, which will be a maximum of £7,500 (i.e. a maximum of £2,500 per month for 3 months).

For the second and final grant, which applications will open for in August 2020:

You will get a taxable grant equivalent to 70% of your average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, and capped at £6,570 in total.

You do not need to have claimed the first grant in order to be eligible for the second and final grant.

How will HMRC calculate the annual trading profit?

If you started trading prior to or during the 2016-17 tax year, your entitlement would be based on an average of 2016-17,2017-18, and 2018-19. If you started trading in the 2017-18 tax year, it would be an average of the two years, 2017-18, and 2018-19. If you started trading in the 2018-19 tax year, it would be based solely on the trading profits from that year.

How do I apply for the scheme? 

HMRC will contact you if you are eligible and invite you to apply online. Once HMRC has received your claim, if you’re eligible for the grant, they will contact you to tell you how much you will get and request the correct payment details. They will then pay the grant directly into your bank account, in one instalment.  

Can a self-employed person still work and claim under the Self-Employed Income Support Scheme? 

Yes, self-employed workers can continue to work for their business and be eligible for the support. This is in stark contrast to the Coronavirus Job Retention Scheme, where employees cannot undertake any work for the employer whilst on furlough.  

I’m the sole director of a limited company, but I’m the only person that works for the business. Am I entitled to this support? 

Unfortunately, not. Directors of limited companies, even those who are the only person who works for the business, are not eligible for this support as they are not classed as self-employed. In this scenario, we suggest you look at other options of support available, for example, the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme or Universal Credit.   

I’ve recently stopped trading, am I still eligible for the scheme because I submitted a 2018-19 self-assessment return? 

No, one of the criteria for eligibility is that you are still trading and are intending to continue therefore if you have stopped trading, you are not entitled to support under this scheme. 

Are self-employed workers entitled to sick pay if they are unwell or need to self-isolate? 

Self-employed workers are not eligible for Statutory Sick Pay, like those employed by a business. During the Budget in March, Rishi Sunak announced that the self-employed will be eligible to claim employment support allowance (ESA) from day one of isolation or sickness (rather than the previous day eight). The criteria for ESA is rather narrow, so many will not be able to benefit from this, but if you do meet these criteria, the benefit is worth £73.10 a week or £57.90 for the under-25s. 

The government has also temporarily changed the Universal Credit system by ignoring the minimum income floor, which is an assumed level of earnings based on what HMRC would expect an employed person to receive in similar circumstances. Therefore, instead of sick pay, the self-employed may be entitled to an increased amount of universal credit so that they receive a similar amount to the £94.25 statutory sick pay. 

I started trading after April 2019, therefore, I am not eligible for support from the Self-Employed Income Support Scheme, what am I entitled to? 

The other support options that the self-employed can access are: 

For further assistance in applying for government financial support during the coronavirus pandemic, contact [email protected].

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