COVID-19: Self-employment Income Support Scheme


The Government has now announced a scheme for self-employed people (and those who are a member of a Partnership), with trading profits of up to £50K per year.  The scheme will take a self-employed person’s profits over the last three years, and will pay them 80% of their average monthly profits over that time-frame, up to £2,500 per month.  The scheme will in the first instance cover a three month period, but will be paid as one payment, and should be paid before the beginning of June.  This payment will be a  taxable grant.  The self-employed person must have lost trading profits due to COVID-19, but they can continue to operate in their business.   

To be eligible a self-employed person must have submitted a tax return for 2019; and have traded in 2019-20 – be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021.  In addition the individual’s earnings must be more than 50% from self-employment.  The Government has given a four-week period for anyone who hasn’t submitted their self-assessment tax return, to do so. 

To calculate an individual’s grant, HMRC will use the figures on your tax returns for your total trading income (turnover), then deduct any allowable business expenses and capital expenditure. HMRC has stated that losses from previous years which have been brought forward to reduce profits in subsequent years will not affect the grant amount. 

Allowable expenses include:

  • office costs, for example stationery or phone bills
  • travel costs, for example fuel, parking, train or bus fares
  • clothing expenses, for example uniforms
  • staff costs, for example salaries or subcontractor costs
  • things you buy to sell on, for example stock or raw materials
  • financial costs.,for example insurance or bank charges
  • costs of your business premises, for example heating, lighting, business rates
  • advertising and marketing, for example website costs
  • training costs related to your business, for example refresher courses

It also includes:

  • any business expenses deducted through the trading allowance
  • capital allowances, used to buy assets used in your business
  • qualifying care relief
  • flat rate expenses

HMRC will not deduct from your trading profits:

  • any losses carried forward from previous years
  • your personal allowance

Where an individual has been self-employed for less than three years, HMRC will take a view on their trading profits.  However, those who do not have at least one year of Accounts, will not be eligible for this scheme.

HMRC will contact the self-employed people directly.  There is no need to contact HMRC about this scheme.

Please note the measures for the self-employed do not currently cover company Directors who are paid part in salary and part in dividends. Company owners who take their earnings as employed income up to the tax-free personal allowance and the rest as dividends may be caught between the Self-employed Income Support Scheme and the Job Retention Scheme.  At this time there is no Government guidance on how a company Director will be supported during this time. As we learn anything further, we will inform clients through our mailings, our website and social media channels.

HMRC has stated that individuals can not ask their accountant to apply for the grant on their behalf. Therefore all eligible clients should ensure now that they have a Government Gateway login.

The Government has announced a second grant for the self-employed. Find out more here.

If you require any advice or guidance, on the impact that COVID-19 is having on your business, or any of the COVID-19 measures, please contact Jackie or Andrew. 

Updated 4th May 2020

Castletons Accountants

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