The Government announced the new ‘Self-Employed Income Support Scheme’ on 26 March 2020 to assist self-employed individuals (including members of partnerships) whose businesses have been affected and have lost income due to the Coronvirus outbreak.

Under this Scheme, individuals will be able to claim a taxable grant worth 80% of your trading profits, up to a maximum of £2,500 per month for the 3 months up to 30 June 2020 (subject to review and extension if necessary).

It is believed that this Scheme will not be open until June 2020.

Please note that this scheme does not apply to directors and shareholders of owner-managed businesses.

In order to qualify to join the Scheme:

You must be self-employed or a member of a partnership
You must have submitted a Tax Return for 2018/19 (due by 31 January 2020)
You must have traded in 2019/20 (i.e. since 6 April 2020)
You must be still trading when you apply, or have ceased trading only as a result of the current COVID-19 crisis
You intend to trade for the remainder of the 2020/21 tax year i.e. up to 5 April 2021.
You have lost income/profits as a result of the COVID-19 crisis.
Your self-employment trading profits must be less than £50,000 (taxable profits of less than £50,000 in 2018/19, or average taxable profits of less than £50,000 in 2016/17, 2017/18, and 2018/19)
More than 50% of your total income must come from self-employment.

HMRC will base your grant upon your earnings according to your Tax Returns between 6 April 2016 and 5 April 2019.

Unlike the Job Retention Scheme for Employers, it appears the self-employed can continue to work during the period in which the grant is available.

It was announced by Rishi Sunak that any individuals who had not declared self-employment earnings on their 2018/19 Tax Return would not be able to join the Scheme. We are awaiting clarification on whether individuals who have registered for self-employment after April 2019 will still be able to apply.

Any individuals who are already registered for self-employment and Self-Assessment but have yet to submit their 2018/19 Tax Return (due by 31 January 2020) must submit their Returns prior to 23 April 2020.

How the grant will be calculated

HMRC will base any grant on 80% of the average earnings between 6 April 2016 and 5 April 2019 to work out an average monthly earnings.
Individuals who qualify will not need to contact HMRC to provide any figures. HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
If less than three years of accounts are available, then the Treasury has said that they will look at what is available and make a judgement on that.
If this amount is less than £2,500 then this will be the grant available, otherwise the maximum amount of £2,500 will be paid for each month, up to 3 months.
This grant will be paid to you, directly to your bank account, in one installment.
Payment and bank details will only be requested once HMRC have received and accepted your claim.

How to Apply

There are currently no plans for self-employed individuals to apply for this Scheme.
HMRC have stated that individuals should not contact them regarding their claims at this stage, as this will only delay the work required to introduce the scheme.

When will I receive the Grant?

The scheme is expected to be open from June, and once your application has been accepted, you should receive a lump sum payment of three months of backdated support directly from HMRC in that month.
In the meantime, the self-employed can access Universal Credit, or apply for a Coronavirus Business Interruption Loan.

Hint for the Future?

The Chancellor also said during the announcement that those who wished to be treated like the employed when it comes to state support should also be expected to pay taxes in the same way in the future.
This suggests that, post-crisis, there may be amendments to the UK’s tax system to bring the taxation of the self-employed more in line with the employed.

Further guidance and details can be found at the HMRC website.