This evening the Chancellor announced further measures in support of the self-employed during the Coronavirus crisis. After the hype over the last few days, it may feel like an anti-climax for many, given the number of caveats applied.
Key points from his speech are as follows:
- Those self-employed individuals who have been adversely affected by the crisis can claim relief equivalent to 80% of their average monthly profits for the last three years (or, if they’ve been trading for less than three, as many as have been reported), as reported on their self-assessment tax returns, subject to a cap of £2,500 per month. This mirrors the relief being made available to furloughed employees.
- The relief is taxable and so will form part of the individual’s taxable earnings on their 2019/20 and 2020/21 tax returns.
- The relief is only available to individuals who have submitted a tax return with self-employment pages for 2018/19 and where that income made up the majority of their total taxable income. For anyone who entered self-employment after 5 April 2019, their financial support is currently still limited to that which is available through Universal Credit.
- The relief is targeted at 95% of the self-employed and so is restricted to those with trading profits of up to £50,000 per year. Anyone with profits in excess of this will be limited to the relief available through Universal Credit.
- Unlike the relief for employees, the self-employed may claim the relief and continue to work.
- The relief will be available no later than June but will be backdated to 1 March, meaning claimants can expect to receive a lump sum for the first payment. The relief will initially be available for 3 months, but may be extended if the crisis continues beyond June.
- HMRC will contact eligible individuals directly and request that they fill in an online form so that HMRC may pay the relief directly into the taxpayer’s bank account. Until then self-employed individuals do not need to contact HMRC.
Many may have hoped that these measures may also have extended to owners of personal companies. At this stage this does not look to be the case.
It should be noted that, given the way in which the relief will be calculated, it does not look like loss-making self-employed businesses will be eligible for any financial support under this measure and their support will currently be limited to that which is available through Universal Credit.
If you have any questions regarding these measures or any of those previously announced, please feel free to contact us.