The Self-Employment Income Support Scheme Explained
This is a scheme set up by the government to help those that are self-employed. It does not apply to directors who run their own company.
To qualify for the scheme, you must firstly have been self-employed and filed a tax return for the 2018 to 2019 tax year. This is the year that ends on 5th April 2019 and the tax return that had a filing deadline of 31st January 2020.
You must also:
Still be trading in the tax year 2019-2020 and be planning to continue to trade if it were not for the Corona Virus
Have suffered financially due to the Corona Virus outbreak
Earn at least 50% of your income from self-employment. Therefore, if you earn the majority of your income from other sources, such as employment, then you will not be able to apply.
If you have not filed your 2018-2019 return, the government has said that you have until 23rd April 2020 to file this return in order to be considered for the scheme.
The figure that HMRC will look at, as far as we know, is the tax adjusted profit figure as shown on your tax return. This is often lower than the profits figure shown on your accounts as it takes into account various allowances that may be applied after the accounts are produced.
If you were not self-employed prior to the 2018-2019 tax year, then HMRC will pay you 80% of the total of the figure on your 2019 tax return, up to a maximum of £2,500 per month, providing it is less than £50,000. If you made a profit of more than £50,000 you are not eligible for this scheme.
If you were self-employed in either the 2018 tax year or the 2017 tax year, then HMRC will take an average figure over these years.
In other words, if you submitted a return during 2017, 2018 and 2019, HMRC will add the figures together and divide the total by 3 to arrive at an average profit figure. You will then be paid 80% of this average figure providing it is less than £50,000, up to a maximum of £2,500 per month.
Payments will be made for a three-month period. Therefore, the 80% profit figure will be divided by 12 to give the number of months in the year, then multiplied by 3 to give the payment due to you.
This scheme is not up and running yet and so you cannot yet apply. It is expected that it will be working by the beginning of June, however this is an estimate. HMRC have asked that you do not call them as this will only delay the scheme start date. Similarly, we do not yet have full details of the scheme, how it will run or how to apply.