Disclaimer – This article is an update to our original publication on the Self-Employment Income Support Scheme published on 6 April 2020. Since the scheme has gone live, there have been further announcements and updated guidance from HMRC and the Chancellor advising how the self-employed can access the scheme.
The government launched the Self-Employment Income Support Scheme earlier in the year as a response to the ongoing coronavirus crisis. The scheme had the initial aim of supporting the income of self-employed people during the pandemic. On 29 May 2020, the Chancellor Rishi Sunak announced further updates and amends to the support scheme.
We are in unprecedented times and the government’s guidance is constantly being updated so it is therefore crucial that you keep up to date with the latest developments. This note gives general guidance and an overview only, but it is not intended to be legal or financial advice.
The latest on the Self-Employed Income Support Scheme
The government announced that applications for a second and final grant will open in August 2020.
The Chancellor plans to make further announcements regarding the scheme in the future.
When can you apply for the second grant?
Applications for the second grant are expected to open in August 2020. Individuals who are eligible for this grant will be able to claim a second taxable grant worth 70% of their average monthly trading profits, which will be paid out in a single instalment covering three months’ worth of profit with a cap of £6,570 in total.
The government has not changed the eligibility criteria, it remains the same as the first grant. An individual does not need to have claimed for the first grant in order to receive the second grant.
To be eligible to make a claim, those who are self-employed, including members of partnerships must have:
- Submitted their Income Tax Self-Assessment tax return for the tax year 2018-19
- Continued to trade in 2019-20 and intend to keep trading in 2020-21
- Carry on a trade which has been adversely affected by COVID-19
- Average self-employed trading profits of no more than £50,000 and at least equal to their non-trading income. [This is slightly different to the original guidance which stated that non-trading profits must be less than 50% of an individual’s total income.]
Individuals who are making a claim under this scheme can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
Applications for the first scheme are now live and can be claimed until 13 July 2020, if eligible. Under the first grant, those eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits. This grant will be paid out in a single instalment covering three months’ worth of profits and is capped at £7,500 in total. The period for the first grant starts from March 2020.
When will payment be made?
If an application is successful, then the money will be paid into your bank account within six working days of completing a claim.
What is the difference in the second grant?
The Government has indicated that the extension to the Self-Employment Income Support Scheme is the final extension to the scheme.
We have prepared a table as a guide to show what the changes are:
|First Grant||Second Grant|
|When can I claim?||Applications are currently being accepted. The final date to apply for this grant is 13 July 2020||Application for the second grant will be open in August 2020|
|Has the eligibility criteria changed?||The eligibility criteria remain the same. You can find out eligibility criteria at gov.uk||The eligibility criteria remain the same. You can find out eligibility criteria at gov.uk|
|How much will be paid out?||A grant worth 80% of your average monthly trading profits, capped at £7,500 in total.||A grant worth 70% of your average monthly trading profits, capped at £6,570 in total.|
|What period will the grant cover?||The payment made will be a single payment covering three months’ worth of profits.||The payment made will be a single payment covering three months’ worth of profits.|
|Is the grant taxable?||Yes, income tax and self-employed national insurance will still apply.||Yes, income tax and self-employed national insurance will still apply.|
|Is the grant repayable?||No||No|
|When will I get the payment?||Payment will be made within 6 working days of completing a claim.||Payment will be made within 6 working days of completing a claim.|
|Will there be a further update?||We are not expecting a further update.||Yes, further information will be published on 12 June 2020.|
Recent clarification on issues and queries
- Trusts and limited companies – It has been confirmed that individuals who are operating as a limited company or are trading through a trust should not claim the grant.
- Adversely affected by coronavirus: -The government has announced and clarified its position on what it means to be affected by the pandemic. This includes individuals being unable to work because they are shielding, self-isolating or on sick leave or have care responsibilities because of coronavirus. It also includes circumstances where an individual has had to scale down or temporarily stop trading because their supply chain has been interrupted or the business has fewer or no customers or clients or their staff are unable to attend work.
- Work visas – It has been confirmed that those individuals who are on a work visa regardless of the category can claim under the scheme, as this grant is not counted as ‘access to public funds’.
- Who can claim? Individuals must claim themselves. A tax agent or adviser must not claim on an individual’s behalf as this will trigger a fraud alert, and individuals will need to contact HMRC. This will result in significant delays to receiving payment of the grant.
For full details of the Self-Employment Income Support Scheme, visit the UK government website.