Coronavirus: Help if you’re self-employed
The Chancellor, Rishi Sunak, has announced further measures to help self-employed workers cope during the coronavirus crisis. So what does it mean to you?
The package in a nutshell
If you’re self-employed or a member of a partnership and you've submitted a tax return for the tax year 2018-19 or 2019-20, you can apply for a grant of up to £7,500.
Anyone who earns up to £50,000 a year can apply. HMRC will ask you for information about your profits over the past three years. This is so they can work out your average monthly profit.
There have been two grants so far this year, you can no longer apply for these. The new grant will cover 30 November 2020 to January 2021.
Another grant will be available from February 2021 to the end of March 2021 – the details of this grant haven’t been finalised yet.
To find out more, read the government announcement.
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I’ve already applied for a grant, am I able to apply again?
If you’ve applied for either of the previous grants, you’ll be able to apply for the November to January grant.
This time though, you’ll need to prove your business has been impacted due to reduced demand because of coronavirus. Rather than due to self-isolating or shielding.
You’ll also have to prove that you want to continue trading in the next tax year.
How much can I apply for?
You can apply for a grant of up to 80% of your average monthly profits over the last three years. This is capped at £7,500, working out at £2,500 a month.
How long can I get the grants for?
The new grant will be available from 30 November 2020 until 30 January 2021.
There will also be another grant from February 2021 to the end of March 2021.
I’ve only been self-employed for a year, so I only have one year of accounts. Can I still claim?
Yes. HMRC will work out your grant by looking at your accounts.
I’ve only just gone self-employed. Can I claim?
Unfortunately not. The government can’t calculate an average monthly income for you. The Treasury is advising people in your situation to claim Universal Credit.
I earn some money from being self-employed, but most of what I earn comes from other sources. Can I claim?
No. You have to earn more than 50% of your income from self-employment.
I earn more than £50,000 a year. Can I apply for the scheme?
No. To be eligible, you have to earn less than £50,000 a year.
I’ve set up a limited company and pay myself through dividends. Am I covered?
No, you’re not eligible for the scheme. To see what other support is available, check GOV.UK.
I think I’m eligible, so what should I do now?
You’ll be able to apply for the grant from 30 November through GOV.UK.
You’ll have to give them details of your profits for the last three years and make a declaration saying the coronavirus has impacted or stopped you from trading.
When will I receive payments?
Once your application has been approved, HMRC will pay the money straight into your bank account.
Will I have to pay tax on any payment I receive?
Yes, the grants are counted as taxable income and will also be subject to National Insurance contributions. You’ll need to declare the payments on your next tax return.
I’m not eligible, is there any other support available?
You could apply for Universal Credit. You should record this as part of your income for self-employment.
Or you could consider applying for the Coronavirus Business Interruption Loan Scheme. For more information on this, visit GOV.UK.
I bought a business insurance policy through Confused.com. Am I covered?
If you bought a business insurance policy after 20 March 2020, you won't be covered for anything that's caused by the coronavirus pandemic.
If you have a policy that you took out before 20 March, what you're covered for will depend on your insurer. You can get more information at our partner, Simply Business.