Coronavirus – Confirmed assistance for the self employed

Author: Douglas-Jones Mercer.

Date: March 27th 2020

Yesterday evening (27th March 2020), Chancellor Rishi Sunak announced the measures the government were taking to assist the 5 million self-employed people in the UK.

As expected, the main form of assistance comes with a taxable grant of 80% of average profits over the last three years up to a maximum of £2,500 per month. This means that the assistance available for those who are self-employed mirrors the assistance available for employees. This grant is available to the self-employed whether or not they have remained in work.

However, there are some caveats to the grant:

  • You must have a tax return for 2019. The Chancellor announced that anyone who missed the January filing deadline for their 2019 tax return has 4 weeks from yesterday’s announcement to file their return and become eligible for the grant. If you don’t have a tax return for 2019, you will not be eligible to receive the grant;
  • The grant is only available to those whose trading profits are £50,000 or less and assistance will be based on profit earned in the last three years. The rationale behind this is that those who earn more profit are expected to have more savings/cash at bank to be able to get through a period of non-trading or non-profit-making;
  • The grant is only available to those who make the majority of their income from self-employment. This means that people who are employed but have their own business as well may not be able to receive the grant. We presume this is to prevent the government paying out twice for one person (once under the Coronavirus Job Protection Scheme and once under the self-employed scheme);
  • The Chancellor announced that they expect assistance to be available from the beginning of June 2020. This means that those who have already ceased trading or are on restricted incomes will need to be able to fund themselves until the assistance becomes available. It is not clear how, if they have employees themselves, they are expected to pay workers who are furloughed or on sickness absence (given the assistance for furloughed workers is on the basis that employers pay employees and then claim the money back);
  • The grant is taxable, and needs to be declared on tax returns by January 2022.

The Chancellor estimates that 95% of the self-employed will benefit, and HMRC will contact individuals to advise them of how to apply for the grant. The Chancellor also reminded us of the assistance already available in the form of deferring self-assessment tax, widening access to Universal Credit and that assistance which is available to everyone being mortgage/loan holidays and further assistance from financial institutions.

This note was written by Georgia Power, a solicitor in DJM’s Corporate and Commercial department. If you need any assistance you can contact Georgia on or on 01792 656518.

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