Covid-19 Chancellor announces package to help the self-employed through coronavirus crisis

After the announcement of a package of measures last week to help businesses and employers through the coronavirus crisis, he has now turned his attention to helping the self-employed. This was, as expected, a much more difficult package to put together and although it has some similarities to the coronavirus job retention scheme published last week, there are a number of differences. HMRC has published a press release and also preliminary guidance.

The headlines are

  • The support will be 80% of monthly profits, averaged over three years 2016/17, 2017/18 and 2018/19
  • It will be capped at £2,500 per month for three months (ie, up to £7,500 in total), but this may be extended
  • It is only available if average annual taxable earnings are below £50,000
  • The majority of income has to be from self-employment
  • Unlike furloughed employees, the individual can continue to operate the business
  • Those who started self-employment after 5 April 2019 are excluded
  • HMRC will contact those eligible
  • HMRC is allowing those who have yet to file their tax return for 2018/19, which was due on 31 January 2020, an additional four weeks to file and get up to date
  • The scheme will be available from the beginning of June 2020, effectively back-dated three months to 1 March 2020, and paid in one lump sum.

We will provide a more detailed briefing this after further reflection. The Chancellor also said that the Government intends to start a discussion on the different tax treatment of the employed and the self-employed, something we have highlighted in the past.

  • What about people who run holiday lets? They are not classified as self-employed. I am not talking about people with other incomes and just let out their holiday homes. There are some who run several holiday lets and this their main (or only) source of income. The 50% ruling on S/E income is fair. It should also be applied to holiday lets. Will ICAEW be making representations to Government about this?

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