6 days after the chancellor’s announcement of the Coronavirus Job Retention Scheme he as announced measures to support all the self-employed workers in the UK. He has been under significant pressure this week to come up with the goods and at parity to the support that employed workers are getting.
Key points we have identified from his speech are as follows:
He started by announcing that the rates grant schemes are now up and running so business should start to see correspondence coming directly from local authorities shortly. We have seen our first client get a letter today asking them to upload bank details to their local authority website.
Coronavirus Job Retention Scheme
He also said they are publishing tonight publishing detailed guidance online about the Coronavirus Job Retention Scheme, but as of writing, there is no more information online.
Self-employed income support scheme
- They will get a taxable grant of 80% of their average taxable profits over the last three years (2016-17, 2017-18 & 2018-19) capped at £2,500 per month
- This scheme again will run for at least 3 months, we assume backdated to March 1st similarly to employee support measures, and promised extension if necessary
- He stated taxpayers will be able to claim these grants and continue to do business. Further clarification will be needed on this as surely self-employed workers that are largely unaffected by Covid-19 to date would not be eligible to a grant on top of normal earnings – presumably, there is some clawback mechanism
- Taxpayers with trading profits up to an average of £50k are eligible for the grant
- Eligibility is also based on the majority of your income being self-employed, presumably when looking at all three tax years. Keyword being majority – to target genuinely self-employed people
- It is only available for taxpayers that have filed at least a 2019 tax return – if a 2019 tax return was due taxpayers now have a 4 week extension to get it filed
- Anyone self-employed since 06.04.19 will have to utilise existing measures announced and/or apply for universal credit
- It is a grant based on profits, so businesses with high overhead costs that cannot be reduced are still going to suffer significantly
- The scheme will open no later than the beginning of June and HMRC will contact taxpayers directly, ask them to fill in a simple online form and pay directly into their bank account – a lump sum of 3 months.
- He encouraged taxpayers to access the CBILS loans and make use of tax and VAT deferral in the meantime whilst waiting for this grant.
We think he has done well, there is obviously a lot more information that is needed.
One huge area missed is small director run companies who are only not “self-employed” due to a company being in place. They are not covered by the above, and only possibly by Coronavirus Job Retention Scheme although the BBC think they will be). Hopefully, this will be addressed in due course – although we are not sure it will be.