Self Employed Income Support Scheme Information

This information sheet has been produced by BPP’s Pro Bono Centre by legally qualified staff members. The information contained in this document is accurate as of 1 June 2020.

In this factsheet, we have put together a summary of some of the proposed Government support plans to help self-employed individuals navigate the extremely difficult situation that COVID-19 presents for them.

Self-Employment Income Support Scheme (SEISS)

Government Income Support Rescue Package

On 1 May 2020, the Treasury published its Direction to HMRC giving statutory footing for the government’s self-employed income support scheme.

Please note that a claim may only be made through the scheme in relation to a trade, the business of which has been adversely affected by coronavirus or coronavirus disease.  The grant does not apply to any self-employed person (provided they fulfilled certain financial criteria).

The rescue package for the self-employed adversely affected by coronavirus, offers a form of self-employment income support whereby eligible self-employed people should receive guaranteed earnings of:

(a) 80% of their monthly income, which can be averaged over the last three years; or

(b) £2,500 per month

whichever is the lower.

This effectively means the Government will ‘top up’ self-employed workers’ earnings to the lower of 80% of their net monthly earnings or £2,500 a month.

Details to be aware of are as follows:

The scheme is open to eligible self-employed individuals with trading profits up to £50,000 per annum; if a self-employed person earns more, they will not qualify.

A self-employed person will need at least one year of accounts and to have submitted a self-assessment tax return for one of the following tax years 2016/17, 2017/18 or 2018/19 to qualify. If someone missed the January deadline, they have a four week extension (running from 26th March) to now submit that tax return.

Self-employed income must be the majority of a person’s earnings to qualify i.e. if someone is employed, but also has a self-employed business which earns them additional money, they are unlikely to qualify.

HMRC will contact potentially eligible self-employed people asking them to complete an online application form and once processed, the income support will be paid directly into bank accounts. There is no immediate action that self-employed people need to take. The Government has however warned that it will be June before these payments begin, so unfortunately this will not assist with immediate cash-flow issues. The other benefits and suggestions listed below may help with immediate cash-flow measures, until this income support comes through.

The scheme will be available for at least three months.

Extension to the SEISS

This scheme is being extended. You’ll be able to make a claim for a second and final grant in August 2020.

The online service for the second and final grant is not available yet. The Government will update their guidance to let you know when you can make your claim.

If you’re eligible the second and final grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

Government Support for the Self-Employed

Employment and Support Allowance (ESA)

‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to Government advice for from the first day of sickness.

Universal Credit

People will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre.

The Minimum Income Floor in Universal Credit will be suspended ‘for everyone affected by the economic impacts of coronavirus’. This means that self-employed people can now access Universal Credit at a rate equivalent to Statutory Sick Pay for employees (approximately £94.25 per week).

HMRC Help and Support

Time to Pay Arrangements

Introduction of ‘Time to Pay’ arrangements – a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back – for businesses and self-employed individuals in financial distress and with outstanding tax liabilities. Applied on a case by case basis.

COVID-19 Helpline

HMRC has set up a dedicated COVID-19 helpline to help those in need, and they may be able to agree a bespoke Time to Pay arrangement. HMRC will also explore waiving late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19. The helpline number is 0800 0159 559 and is open 8am-8pm Monday to Friday and 8am-4pm on Saturdays. The line will be closed on Bank Holidays.

The next Income Tax self-assessment payments will be deferred until January 2021.

The proposed rollout of tax reform IR35 to the private sector in April has been postponed for one year to April 2021 as a result of COVID-19.

Other Support for the Self-Employed

Coronavirus Business Interruption Loan Scheme

A new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan.

Mortgage Payment Holidays

Support for households affected by COVID-19 by providing mortgage payment holidays of up to three months.

Further Information

Help and Advice

Check if you can claim ESA here: https://www.citizensadvice.org.uk/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/before-you-apply-for-esa/eligiblility-for-esa/

Check if you can claim Universal Credit here: https://www.citizensadvice.org.uk/benefits/universal-credit/

HMRC COVID-19 Helpline: 0800 0159 559

Information and Updates

The UK Government publishes a number of documents and updates as part of the ongoing response to Covid-19. These can be found on the UK Government website here: https://www.gov.uk/coronavirus

Wellbeing

This is an extremely difficult time for everyone. There is much uncertainty and a lot of anxiety. Along with your physical health, it is important to look after your emotional wellbeing during this period. There are a number of organisations that can h