On the 26th March, the Chancellor announced the Coronavirus Self-Employment Income Support Scheme, designed to support those who are self-employed and have lost income due to the Coronavirus pandemic. With many events professionals being self-employed, we want to take a look at the support available and answer any questions you might have.
What is the Self-Employment Income Support Scheme?
If you’re successful in applying for the Self-Employment Income Support Scheme, you’ll receive a monthly, taxable grant from HMRC. The amount you receive will be 80% of your average profits from the previous three tax years (where applicable). HMRC will work this out by adding together your total trading profit for the last three tax years, dividing this by three and then using this to calculate a monthly amount.
The maximum you’ll be able to receive is £2,500 a month.
The Chancellor said in his announcement that 95% of those who are self-employed will be eligible for the scheme. In order to be eligible, you need to be self-employed or a member of a partnership. You also need to:
- Submit your Self Assessment tax return for the tax year 2018-19 (the government has now extended the deadline for this to the 23rd April 2020).
- Have traded in the tax year 2019-20.
- Be trading currently (unless you’re unable to because of the Coronavirus).
- Be planning on continuing to trade in the tax year 2020-21.
- Have lost income due to the Coronavirus.
The Chancellor also stated in his announcement that the scheme would only apply to those who make the majority of their income by being self-employed.
However, there are groups of the self-employed who won't be eligible:
- Those who have an average trading profit of over £50,000.
- Individuals who have recently become self-employed.
- Those who have set themselves up as directors of their own limited companies.
How to apply to the scheme
If you’re eligible to apply for the scheme, HMRC will contact you inviting you to apply online – you don’t need to take any further action at this time (and in fact, HMRC asks that you refrain from contacting them as this will only slow down the work they’re doing to get the scheme ready).
Be wary of scammers contacting you pretending to be HMRC – when you're eventually invited to apply to the scheme, this will be via GOV.UK.
How will recipients get paid?
When HMRC has received your application for the grant, they'll contact you to let you know how much money you'll receive. The grant will be paid directly into your bank account, in one instalment. However, recipients aren’t expected to actually receive the grant until June.
Remember that you'll be taxed on the money you receive as part of the grant.
How long will the scheme be in operation?
The scheme is initially available for three months but may be extended by the government if needed.
Can I continue to work while I’m on the scheme?
Yes, self-employed people will be able to continue to work while they’re on the scheme.
What happens if I've been self-employed for less than a year?
You won’t be eligible for the scheme but you may be eligible to apply for Universal Credit.
Will I be able to get the maximum of £2,500 if I earn over £50,000 a year?
No, you won't be eligible for the scheme at all if you earn over £50,000 a year. This is one way in which the restrictions for this scheme differ from those for the Job Retention Scheme.
What about those who are Sole Directors of limited companies?
As the director of a limited company, you won’t be eligible for the scheme even if you’re a one-person band. This is because you are, technically, an employee of your own company.
Sole Directors are eligible for the Coronavirus Job Retention Scheme which means you may be eligible to furlough yourself and receive 80% of your PAYE income from HMRC. Just bear in mind that this doesn't take into account any dividends you receive.
As the Job Retention Scheme was designed to protect the jobs of those who would otherwise be made redundant, recipients aren't supposed to do any work for the company while they're on it. Currently, there isn't much clear guidance about what work exactly Sole Directors will be able to do while they’re on the scheme, but it’s likely you’ll still be able to continue fulfilling your legal duties as a director as long as you stop all other work.
What other support is available?
Sole Directors and others who aren't eligible for the scheme may want to investigate the other forms of help available to the self-employed – as will those who'll need additional support while they’re waiting for the grant to arrive in June. Other kinds of support for the self-employed include:
- Deferral of the upcoming Self Assessment payments and VAT payments
- Small Business Grant Scheme funding from your council
- Increased payments of Universal Credit
- The Coronavirus Business Interruption Loan Scheme
- Statutory Sick Pay relief package for SMEs (which might be useful if you become ill with COVID-19)
- HMRC Time To Pay Scheme
We’ll keep this page updated as the government releases more guidance about the Coronavirus Self-Employment Income Support Scheme. If you have any further questions, please feel free to contact us on firstname.lastname@example.org, where we’ll do our best to help.
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