Help for self-employed workers

27 March 2020

There had been substantial concern voiced from self-employed individuals, who reportedly account for 15% of the workforce, and yet had not received the same reassurance about their own lack of income.

On the 26 March 2020, the Chancellor announced further measures for the self-employed to help cope with the financial impact of Coronavirus. Called the Coronavirus Self-employment Income Support Scheme, if you are self employed or in a partnership and have suffered a loss in income, a taxable grant worth 80% of your average monthly profits over the last three years, up to £2,500 a month, will be available. The grant will be available to people across the UK for at least three months, and longer if necessary, however the money will be paid in a single lump sum, and will not begin to arrive until the start of June at the earliest.

HMRC will use existing information to identify those eligible and will invite applications (you do not need to contact them). To be eligible, more than half of your income needs to come from self-employment. The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. However, if you started trading between 2016 and March 2019, HMRC will take into account those years for which tax returns have been made in assessing the self-employed income. If you have not submitted a 2019 return yet, HMRC will take into account submissions before 23 April 2020.

For more of the detail behind the Self-Employment Income Support Scheme, please read our SEISS FAQs within our COVID-19 advice and guidance section.

It should be noted that those who operate through personal service companies, drawing their income as salary and dividends, will not benefit from the assistance for the self-employed and, as they typically draw low salaries, will not be able to obtain significant income from the Coronavirus Job Retention Scheme. If they do not have resources within their personal service companies, they will need to look to Universal Credit and the Coronavirus Business Interruption Loan Scheme.

The Government is also suspending the ‘minimum income floor’ for the duration of the Coronavirus outbreak, which means that Universal Credit payments will be based on what a self-employed person actually earns. Under normal circumstances, the DWP would make an assumption about a person’s earnings, irrespective of what they actually earn, in the first twelve months of self-employment.  Those expected earnings are known as the ‘minimum income floor’.

For this temporary period, self-employed workers will be treated the same as employees within the Universal Credit system, receiving a rate equivalent to statutory sick pay.