Assistance if you are self-employed

Following on from our articles on the Job Retention Scheme, we address here the support available from the government for the self-employed in response to COVID-19.

Self-employment Income Support Scheme (SEISS)

SEISS provides a similar level of support to the job retention scheme (80% of trading profits up to a maximum of £2,500 per month for three months). In order to qualify for SEISS you must:

  • be either a self-employed individual or a member of a partnership;
  • have submitted your tax return for the tax year 2018-2019 (the deadline of 1 January 2020 for submitting this has been extended to 23 April 2020 in order to qualify for SEISS);
  • Have traded in the tax year of 2019-2020 and be trading when you apply (or would be except for COVID-19) and intend to continue trading in the tax year 2020-2021;
  • have trading profits of less than £50,000;
  • obtain more than half of your income from self-employment; and
  • have lost trading profits due to COVID-19.

The amount to be paid is defined as a taxable grant and will be calculated at 80% of the average of your last three years’ trading profits (taken from your last three tax returns), subject to the maximum of £2,500.

Those who are eligible will be contacted by HMRC directly in order to apply.

The three month payment will be made in one lump sum and it is likely that payment will not be made until 1 June 2020. Like the Job Retention Scheme, it seems that SEISS may be extended beyond the initial three month period should it be necessary.

Unlike under the Job Retention Scheme, individuals can continue working whilst receiving this grant.

This scheme will not cover contractors working through a Personal Service Company, although if the contractor is paid salary and dividends lawfully (outside of IR35) via PAYE by the PSC they may be eligible for the Job Retention Scheme in respect of the salary payments.

A wide range of workers and traders who believe they are self- employed, and may in fact be so for certain purposes, fall outside of this scheme. Freelancers on zero-hours contracts but paid on payroll systems are not covered (but may be able to access the Job Retention Scheme).

Additional measures to support the self-employed

  • Self-assessment payments on account due in July 2020 may be deferred to January 2021.
  • VAT payments due between 20 March 2020 and 30 June 2020 may be deferred for three months.
  • The rules for applying for Universal Credit have been relaxed to make it easier for the self-employed to access.

If you require any advice or guidance in connection with your contracts or contractual obligations, we strongly recommend seeking legal advice and acting as soon as possible.