A summary of the latest government support package, this time – finally – for the Self-Employed. As always, the devil is in the detail and there are many people who will still fall through the cracks. Read a detailed summary of who is eligible and who is not, from our client Carbon Accountancy
We have finally received some much-needed additional support measures which cover the Self
Employed, although there are elements of detail that will cause difficulties and confusion.
The measures for self-employed people are, understandably perhaps, the most complicated
issue for the government to address, as large business is relatively easy support and employees
have a known monthly salary.
It was always expected that the measures announced were therefore never going to be
perfect and we have to admit that, sadly, they are far from perfect. Many people will not get the
assistance they need and are therefore still falling between the gaps.
Let’s deal with some of the difficult issues first:
• These measures do NOT cover people running their business through limited
companies. Typically, directors of small companies pay themselves a salary of about
£700 per month (they then draw dividends on top). They may qualify for the 80% salary
assistance programme – £560 per month, which is not going to be sufficient by any means
for most people.
• The measures will NOT cover self-employed people with an annual net profit over
£50,000 per annum (or average of over £50,000 for the last 3 years) – they will not get
• The measures will NOT cover self-employed people who started businesses after 5th April
2019 – they will not have included any self-employed profits on their 2018/19 tax return
and are therefore excluded.
• We understand that the measures will NOT cover self-employed people who have not
filed their 2018/19 tax return by 31st May 2019 – if you have not filed your return it is
essential you do so – they need to be able to see self-employed income in your 2018/19
tax return or you will not be eligible.
• We understand that you have to continue to be self-employed – so if you permanently
close your business due to this crisis you may NOT be permitted to receive a grant.
• The measure will NOT cover those people whose self-employed income is less than half
of their total taxable income – so people who, for example, have significant employment
income or rental income may not get any assistance from this announcement. The reality
is that many people who started their business during the 2018/19 tax year will also be
excluded as they may well have had employment income that is over half their income for
that tax year.
Now to give some detail on the measures for those self-employed people who
WILL get help from this announcement:
• Self-employed people (including those in partnership) who have an annual profit (that is
profit, NOT turnover) of less than £50,000 (per partner where relevant) will be eligible for a
taxable grant of up to £2,500 per month or 80% of their monthly profits (whichever is less),
based on an average of the previous 3 years profits.
• The grant will not be paid before June 2020 but can be backdated to March 2020. The
government has said it will consider extending the 3 months if it is warranted.
• HMRC will be writing to people to invite applications for the assistance – so at the moment
you do not need to do anything. Once you are invited to apply you will need to complete a
form and nominate a bank account to have the money paid into.
• The June 2020 timetable is due to there being no current system in place to administer
the scheme – they still need to design it and build it so people can apply for funds. I do
realise the impact this will have on many businesspeople; it will be difficult being told help
is on the way but not until June, when you have bills to pay now. But realistically it is
difficult to build a new system in a shorter timeframe, so bear with them. Once approved
the grant is going to be paid in a single lump sum to cover the whole three-month period.
• It should be noted that you are allowed to continue running your business – there is no
requirement to cease operations.