Coronavirus: Self-Employment Income Support Scheme

To support the self-employed through the coronavirus outbreak the Government has announced the Self-employment Income Support Scheme (SEISS). This will pay cash grants worth 80% of total profits, up to £2,500 per month over a three-month period starting from March 2020.

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On 30 April, the Government published the Treasury Direction to HMRC, the formal legislative guidelines for the Scheme, and HMRC updated their guidance on 4 May. This piece was updated on 5 May following the publication of this Treasury Direction and the revised HMRC guidance.

The Office for National Statistics (ONS) estimates that just over 5 million people (15% of the UK workforce) are self-employed. The Government says the Self-Employment Income Support Scheme (SEISS) will cover 95% of people who get the majority of their earnings from self-employment. The Institute for Fiscal Studies (IFS) estimates that just 62% of all self-employed individuals will be covered.

HMRC has issued updated guidance on the Scheme that says:

  • The scheme targets self-employed people or members of a partnership who have lost trading/partnership trading profits due to Coronavirus outbreak.
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  • This scheme will pay direct cash grants to self-employed workers worth 80% of their profits, up to £2,500/month for three months, and may be extended “if necessary”.
  • You cannot apply for this scheme yet. HMRC will contact individuals it ascertains as being eligible for the scheme. They will then be invited to apply online. The Government has asked that people not contact HMRC to enquire about this support at this stage, as this will likely slow down the overall process.
  • The cash grant will be paid in a lump sum (worth up to £7,500) for the three months.
  • Eligibility is limited to those people:
    • who are currently self-employed
    • submitted a tax return for 2018/19
    • make the majority of their income (over 50%) from self-employment
    • whose average earnings are less than £50,000 in the years in which they traded in the period 2016-19
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  • The scheme will not apply to those who operate under a company structure and take dividends. The IFS says there are around 2 million of these owner-managed companies.

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