On 26 March 2020 the government announced further financial measures to support the approximately 5 million self-employed and freelance workers in the UK who have been affected by the Covid-19 pandemic. After a period of uncertainty for those in this group, the financial package announced is intended to give the self-employed a degree of “parity” with the measures already in place for furloughed employees, including access to a new Self-Employed Income Support Scheme (SEISS).

Are you eligible for Self-Employed Income Support?

The scheme is structured as follows:

  • will be available to individuals whose self-employed income is averaged at £50,000 or below;
  • will be based on average earnings from the last three years (or less if you don’t have three years);
  • the majority of your earnings have to be derived from self-employment; 
  • you must have been self-employed and have filed a tax-return in 2019 (if you haven’t filed a 2019 tax-return you have until 23 April 2020 to do so); 
  • the scheme will be available at the start of June 2020;
  • HMRC has stated that there is no need for individuals to apply for SEISS themselves and, instead, will be contacted by HMRC directly. Do be mindful that fraud related activity may target you in these times and to act with vigilance when giving out sensitive information relating to yourself or your business;
  • a payment of 80% of your average monthly earnings based on the average of the last three years (or less as mentioned above) will be paid for three months, capped at £2,500 per month.  The payments are subject to tax and must be reflected accordingly on any subsequent tax returns. As with the other rescue packages announced to date, there is an acknowledgement that the period of coverage for such payments may be extended depending on how the pandemic develops.

Other support

SEISS will not support all of the self-employed and there will be some earning more than the £50,000 cap who will be impacted.  However, the Government has also provided the following support for the self-employed:

  • tax payments that were due to be paid in July 2020 can be deferred until January 2021.  While this tax still needs to be paid it will help short-term cash flow; 
  • business loans under the Coronavirus Business Interruption Loan Scheme are available; 
  • qualifying self-employed individuals will be able to access Universal Credit which, from 6 April 2020, will undergo temporary changes to relax the minimum income floor; 
  • qualifying self-employed individuals will be able to access Working Tax Credit payments which are being increased from 1 April 2020.

It was also clear from the statement made by the Government that the self-employed should expect, in the near future, to pay the same National Insurance Contributions as employees.  In the opinion of some commentators, we may see significant tax rises for all in the future given the scale of the support announced by the Government in response to the COVID-19 pandemic.

Given the rapidly developing situation it is likely that the Government will announce further measures in the coming weeks, and we will be keep you appraised of this. 

Should you require any further guidance in relation to the matters covered in this article, do not hesitate to contact us on 0161 941 4000 or via email.