Self-employment benefits.

| Sedulo COVID-19 guidance

What is it?

For the self-employed, the Government introduced the “Self Employed Income Support Scheme” which allowed self-employed people adversely affected by COVID-19 to claim a taxable grant based on average profits.

The first grant closed in July 2020 and the second grant closed in October 2020.

The Government have announced an extension to the scheme in the form of two grants, each available for three-month periods covering November 2020 to January 2021 and February 2021 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government have not yet announced the level of the second grant.

Both grants are taxable income and also subject to National Insurance contributions.

Who is eligible?

To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:

  1. have been previously eligible for the Self-Employment Income Support Scheme first and second grant – see below (although they do not have to have claimed the previous grants)
  2. declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

Recap of eligibility for first and second grants; to be eligible you must meet all of the following conditions:

  • Be self-employed or a member of partnership (note that Directors of Limited Companies are not classed as self-employed);
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. The 18-19 tax return must have been filed by 23 April 2020.
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020/21;
  • Have trading profits of less than £50,000 (note that rental profits are not classed as trading profits) and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018/19
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

How to claim

The Government will release the online portal to claim the grant from 30 November 2020. We anticipate that it will be the same portal used for the first and second grants.