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Self-employment Income Support Scheme

Self-employment Income Support Scheme

What is it?

The Government have introduced this scheme to allow self-employed individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month until April 2021.

Who is it for?

You qualify for this scheme if you are a self-employed individual or a member of a partnership that:

  • has 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
  • has lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be:

  • less than £50,000, and
  • more than half of your total income come from self-employment.

If either of these conditions do not apply then HMRC will allow you to average profits over the 2016/17, 2017/18 and 2018/19 tax years so that these conditions will be treated as met. 

Your total income is the total of all your: 

  • income from earnings 
  • trading profits 
  • property income (e.g. rental profits) 
  • dividends 
  • savings income 
  • pension income 
  • miscellaneous income (including social security income) 

These figures will be on your tax return and will also show in the online tax calculation for the particular tax year or on the SA302 tax calculation if you received a paper calculation from HMRC. 

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

This scheme is not for those who pay themselves a salary and dividends through their own company. If you do pay yourself through your own company you will not be covered by this scheme but you may be covered for your salary by the Coronavirus Job Retention Scheme if you are operating PAYE schemes.

How does it work?

The grant is being extended from 1 November 2020

The Self-Employment Income Support Scheme Grant Extension provides critical support to the self-employed in the form of two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.


As of the 20 October 2020, you can no longer make a claim for the second grant


The scheme is now closed to new claims for the first grant.


Find out how HMRC works out your total income and trading profits for the Self-employment Income Support Scheme

What should I do next?

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

Check if you’re eligible to claim
You can use the online tool to find out if you’re eligible to make a claim. Your tax agent or adviser can also use the online tool on your behalf.

You’ll need your:

You can make a claim for Universal Credit while you wait for the grant, but any grant received will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected. If you receive the grant you can continue to work or take on other employment including voluntary work.

If you’re unable to claim online you should contact HMRC for help.

If your claim is approved you’ll receive your payment within 6 working days.

Critchleys Clients: If you have specific questions, please contact your Critchleys Accountant directly.

For more information, visit: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

 

 


Published 27 March 2020
Last Updated 22 October 2020

22 October 2020
The grant is being extended from 1 November 2020

The Self-Employment Income Support Scheme Grant Extension provides critical support to the self-employed in the form of two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

20 October 2020
You can no longer make a claim for the second grant.

24 September 2020
This scheme has been extended to 31 January 2021. 

The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

17 August 2020
The Self-Employment Income Support Scheme claim service is now open.

16 July 2020
The scheme is now closed to new claims for the first grant.

The scheme has been extended. If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second and final grant from 17 August 2020.

If you want to claim the second and final grant you must make your claim on or before 19 October 2020.

15 June 2020
Find out about the extension to the scheme

This scheme is being extended, and you’ll be able to claim a second and final grant in August 2020.

We will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.

This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

You can claim for the second and final grant even if you did not make a claim for the first grant.

The online service for the second and final grant is not available yet. Do not contact HMRC as the will update this guidance when this service is available.

1 June 2020
The scheme has now been extended. A second and final grant will be available when the scheme opens again in August 2020. If you’re eligible and want to claim the first grant you must make your claim on or before 13 July 2020.

13 May 2020
What should I do next?

The online service is now available. Make your claim from the date HMRC gave you. If you’re unable to claim online you should contact HMRC for help. If your claim is approved you’ll receive your payment within 6 working days.

5 May 2020
What should I do next?

The online service will be available from 13 May 2020. If you’re eligible, HMRC will tell you the date you can make your claim from. If your claim is approved you’ll receive your payment within 6 working days.

If you’re unable to claim online an alternative way to claim will be available. This will be updated shortly.

Check if you’re eligible to claim
You can use the online tool to find out if you’re eligible to make a claim. Your tax agent or adviser can also use the online tool on your behalf.

You’ll need your:

23 April 2020
Who is it for?

Your self-employed trading profits must also be:

  • less than £50,000, and
  • more than half of your total income come from self-employment.

If either of these condition do not apply then HMRC will allow you to average profits over the 2016/17, 2017/18 and 2018/19 tax years so that these conditions will be treated as met. 

Your total income is the total of all your: 

  • income from earnings 
  • trading profits 
  • property income (e.g. rental profits) 
  • dividends 
  • savings income 
  • pension income 
  • miscellaneous income (including social security income) 

These figures will be on your tax return and will also show in the online tax calculation for the particular tax year or on the SA302 tax calculation if you received a paper calculation from HMRC. 

15 April 2020
How does it work?
If you amend a submitted return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.

HMRC will pay the grant directly into your bank account, in one instalment.

The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.

If you have not submitted Self Assessment tax returns for all 3 years
HMRC will work out your average trading profit based on continuous periods of self-employment, which will be either:

  • the tax years 2017 to 2018 and 2018 to 2019
  • the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017

If you have loans covered by the loan charge
If you’re self-employed and have received payment for work or services in the form of a loan or other form of credit covered by the loan charge, you may be able to claim the grant, however your eligibility and average trading profits will be based on either:

  • the average of the tax years 2016 to 2017 and 2017 to 2018
  • the tax year 2017 to 2018 if you were not self-employed in the tax year 2016 to 2017

If you’re a farmer claiming farmers’ averaging relief
HMRC will use the amount of profit before the impact of the averaging claims to work out:

  • if you can claim the grant
  • how much grant you will receive

Find out how HMRC works out your total income and trading profits for the Self-employment Income Support Scheme

What should I do next?
HMRC are aiming to contact those eligible by mid May 2020 and make payments by early June 2020.

You can make a claim for Universal Credit while you wait for the grant, but any grant received will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected. If you receive the grant you can continue to work or take on other employment including voluntary work.

27 March 2020
First published. 

Find out more about Ian Timms

Ian Timms

Ian Timms

Ian is a Partner and the Head of Business Tax at Critchleys LLP.

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