Self-employment Income Support Scheme

Self-employment Income Support Scheme

  • People who are self-employed will receive a direct cash grant of 80% of their average profits over 3 years, up to £2,500 per month
  • It is open to anyone with average profits of £50,000 or less.
  • It will operate for three months initially but could be extended
  • The system will take time to establish and grants won’t be available until June – at which time those eligible will receive a payment for the whole three month period. So in effect, this will be a one-off grant to the self-employed
  • HMRC will use the average trading profits from tax returns in 2016-17, 2017-18 and 2018-19 to determine the size of the grant. For those without 3 years of returns, the Treasury will look at what they do have but there will be nothing for the newly self-employed without any filed accounts.

For details on how to apply and whether you qualify go HERE

What happens to individuals whose 2018/19 profits are very different to what they would have expected to make this year?

The government can only act on the most recently available data. This is from the 2018/19 tax year.

To try to provide the most accurate possible estimate of self-employed income, we can look at average profits over 16/17, 17/18 and 18/19.


What about those who haven’t filed their 2018/19 tax return yet?

The scheme is for those who have filed a tax return to report income from self-employment in the tax year 2018-19.

For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the announcement to file their returns, until 23 April 2020, and therefore become eligible for this scheme.


Is this grant subject to tax?

Yes – individuals will pay Income Tax and National Insurance on any payments received through this scheme as they are replacement for income in line with normal practice for benefits or grants that replace income.

The grant is recognised as income for the purposes of Universal Credit and Tax Credits and may impact the amount claimants are entitled to.


What should self-employed people do while they wait to be paid? 

In the interim, self-employed individuals may be eligible for universal credit.

The government has provided over £6.5bn of additional support through the welfare system for those affected by Covid-19. Further information on how to access this support can be found here.


Why is this scheme limited to those who with trading profits below £50,000? For many, higher incomes might mean higher losses at this time.

In order to target support at those most in need, the government has chosen to cap this scheme.

For all those with trading profits of £50,000 and over, the mean self-employment income is £186,000 and the mean total income is £217,000.

Those with higher average incomes are more likely to have access to savings and other resources.

They may also still be able to access support through the temporary Coronavirus Business Interruption Loan Scheme.


Why does this scheme not cover small businesses who are incorporated? 

Self-employed individuals who are owner-managers and pay themselves a salary through PAYE will be eligible for support through the Coronavirus Job Retention Scheme. Further details can be found here.

SMEs can also access support through the temporary Coronavirus Business Interruption Loan Scheme. This supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

This new Self-Employment Income Support Scheme is open to anyone who reports trading profits through Income Tax Self-Assessment. Self-employed individuals who work through a company do not report their trading profits in this way.


What about self-employed people on Universal Credit?  Why should they benefit twice?

We have announced measures that can be quickly and effectively operationalised. DWP and HMRC are experiencing high demand and the government has to prioritise the safety and stability of the benefits system and tax system overall.

The Self Employed Income Support Scheme will be treated as earnings in UC in the same way as the Coronavirus Job Retention Scheme.  Universal Credit is designed to adjust the amount of benefits you receive in response to changes in your income.

Unemployed people will benefit from the package of welfare measures announced by the Chancellor.  These include increasing the Universal Credit standard allowance by £1,000 a year for the next 12 months, and nearly £1bn of additional support for private renters through increases in the generosity of housing benefit and Universal Credit. Further information on how to access this support can be found here.