The scheme will allow applicants to claim a taxable grant which is worth 80% of trading profits for the next 3 months. This will be capped at £2,500 per month and is subject to potential extension and review.
Those who are self-employed may claim these grants whilst continuing to do business. This makes the Scheme different from 'furloughed leave' which requires employees to stay at home and not work.
Who does the scheme cover?
The scheme is available if you are self-employed or a member of a partnership and the following apply to you:
- you have been trading in the year 2019-20;
- your annual trading profits do not exceed £50k;
- the majority (more than half) of your income comes from self-employment;
- your trading profits have suffered due to COVID-19;
- you are still trading at the date of application, or would be if you had not been affected by COVID-19;
- you have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19 (but if you have not done so already you have until 23 April to submit your tax return) ; and
- you intend to continue trading in the tax year 2020-21.
How can I apply?
Currently you do not have to do anything.
The scheme is not yet open to applications, but once it is then HMRC will contact all eligible parties and invite you to apply online.
You should be aware of any contact you receive through email, text or calls from people claiming to be HMRC as this will likely be a scam. The only access to this scheme will be through GOV.UK
What will I get under the Scheme?
- Self-employed or members of partnerships who qualify under the scheme will be eligible for a taxable grant of 80% of average profits from the applicable tax year between 2016 and 2019.
- HMRC will add together your total trading profit from up to the last three tax years and divide by the number of years you have been trading (up to three years).
- The result will produce your monthly amount which is used to calculate what you are owed under the scheme.
- HMRC will then pay your grant in one instalment, directly into your bank account.
- The maximum amount you will receive under the scheme is £2,500 per month for three months.
- You will also be contacted by HMRC and given the details of how much you will receive under the scheme.
Unfortunately the scheme is unlikely to provide immediate relief to cash flow issues as it is unlikely to be up and running until at least the end of June. However it should give most eligible members of the public at least a little more security
Information on further help the UK Government is providing to the self-employed is available on their website.
We hope that this brief note has provided some clarity to the new rules. If you are an employee and potentially eligible under the Job Retention Scheme then you can read our advice note here. You can also read answers from our specialist employment lawyers on further COVID-19 related FAQs.
Finally please get in touch with a member of our employment law team for further help and advice in this difficult and unprecedented time. We are here to give you support and are regularly updating our advice as the Government publishes further information daily.