COVID-19 Statutory self-employment pay scheme. The Chancellor announced the following new measures on 26 March 2020.

Support for the self-employed during the coronavirus crisis:

  • A taxable grant of 80% of average monthly profits over the past three years.*
  • Capped at £2,500 per month.
  • Initially payable for 3 months.
  • Applies to self-employed individuals with trading profits up to £50,000 per year whose majority of income comes from being self-employed.

*To work out the average HMRC will add together the total trading profit for the three tax years, or less, if you have been trading a shorter time and then divide by three or the number of months and use this to calculate a monthly amount.

Note that:

Qualifying conditions

You:

  • Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19 or you will submit your return by 23 April 2020.
  • Have traded in the tax year 2019-20.
  • Are trading when you apply or would be except for COVID-19.
  • Intend to continue to trade in the tax year 2020-21.
  • You have lost trading/partnership trading profits due to COVID-19.
  • Your self-employed trading profits must also be less than £50,000.

Additionally, more than half of your income comes from self-employment.

One of the following conditions must be met:

  1. Your trading profits/partnership trading profits in 2018-19 was less than £50,000. and these profits constitute more than half of your total taxable income
  2. Your average trading profits in 2016-17, 2017-18, and 2018-19 are less than £50,000.

In either case, the profits in 1. or 2. constitute more than half of your average taxable income in the same period.

If you started trading between the years 2016 to 2019, HMRC will only use those years for which you filed a Self Assessment tax return.

If you have not submitted your Income Tax Self Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk-assess any late returns filed before the 23 April 2020 deadline in the usual way.

  • You must be registered as self-employed and have filed a 2019 tax return.
  • For those who missed the 31 January 2020 return deadline, there is now a four week period in which to file one.
  • The scheme is expected to commencing paying out in June 2020. The grant will be paid directly into your bank account, in one instalment.
  • HMRC will contact registered taxpayers, ask you to fill in a simple online form and the grant will be paid directly into your bank account.
  • The scheme may be extended if necessary.

The comparable Employee Job Retention scheme for employees will apply to furloughed workers laid off during the crisis and has a cap of £2,500 per month. 

Additional support for small business

  • Employee job retention scheme: if you have other employees.
  • Grant funding: If you have a business premises.
  • Small business rate relief: If you have a business premises.
  • VAT payment deferral.
  • Emergency bank loans.

See our COVID-19: Financial support Tracker for links.

Links to our guides

COVID-19: Government support tracker

External links

Guidance: Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme

Chancellor's statement 26 March 2020

Coronavirus Bill 23 March 2020     

Comments (27)

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Thanks
some of my clients are asking whether this 80% claim through payroll software and do you need
to submit the wages as normal or different portal and also
Directors/secretary wages of company is covered by this for ltd company

Guest
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Abdul - see our guide for employees and employers - claimed via payroll
https://www.rossmartin.co.uk/covid-19/4634-covid-19-employee-job-retention-scheme

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I really want to know, when the government states "self-employed and freelancer", does this cover those director/shareholder who trades through a limited company?

My understanding is, HMRC define self employed as sole trader.

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Self employed means a sole trader or partner in a partnership. If you are sole director of your own company you are employed for tax purposes. See this guide https://www.rossmartin.co.uk/covid-19/4634-covid-19-employee-job-retention-scheme

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There's an "expert" on Sky News now who says he thinks that a sole director who becomes furloughed would be able to claim 80% of what was on their tax return, so including dividends. Personally, I don't read it that way. Would be surprised if...

There's an "expert" on Sky News now who says he thinks that a sole director who becomes furloughed would be able to claim 80% of what was on their tax return, so including dividends. Personally, I don't read it that way. Would be surprised if they did that.

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Martyn, no idea who the expert is. We need more guidance from HMRC. My thinking is that if furloughed the amount reclaimed is 80% of salary, so this must reflect what is on the payroll. See https://www.rossmartin.co.uk/covid-19/4643-covid-19-compa...

Martyn, no idea who the expert is. We need more guidance from HMRC. My thinking is that if furloughed the amount reclaimed is 80% of salary, so this must reflect what is on the payroll. See https://www.rossmartin.co.uk/covid-19/4643-covid-19-company-directors-shareholders

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What about anyone making losses ?
(& off setting it against another profit ?)
Can a previous tax return be re-submitted in order not to claim the loss relief ?

How much is 80% of nothing ?
Can only 1 of the incomes be included - ie the profit...

What about anyone making losses ?
(& off setting it against another profit ?)
Can a previous tax return be re-submitted in order not to claim the loss relief ?

How much is 80% of nothing ?
Can only 1 of the incomes be included - ie the profit (the loss isn't allowed) (as happens when council tax benefit is applied for ?)

What date does directors wages 80% apply - what if they change their pay structure to a higher amount under paye (& less dividends) from say March 2020, or April 2020 ? - will they qualify for furlough ?

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If you have made a loss in past years then you will need to claim Universal Credit.
If you have misclaimed your expenses in earlier years you will have to notify HMRC to that effect. Quite a high risk strategy: why were your expenses incorrect in...

If you have made a loss in past years then you will need to claim Universal Credit.
If you have misclaimed your expenses in earlier years you will have to notify HMRC to that effect. Quite a high risk strategy: why were your expenses incorrect in previous years? Why did you not take advice at the time? Penalties may apply for carelessness or deliberate failures.

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A sole director is an employee who receives a salary and would be entitled to the comparable Employee Job Retention scheme for employees will apply to furloughed workers laid off. Schedule E income.

A self employed person is taxed under...

A sole director is an employee who receives a salary and would be entitled to the comparable Employee Job Retention scheme for employees will apply to furloughed workers laid off. Schedule E income.

A self employed person is taxed under Schedule D case I.

I am not sure if the schedules are used these days...but there is a difference and that is what I am telling my clients.

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I am trying to grapple with this,....surely you can not furlough a sole director.....they need to continue their director duties under company law therefore they must still be working even though there is no income coming in??

Guest
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I have posted up our thoughts on the issues with respect to company directors & shareholders see https://www.rossmartin.co.uk/covid-19/4643-covid-19-company-directors-shareholders

This is not HMRC's guidance, but some thoughts based on a...

I have posted up our thoughts on the issues with respect to company directors & shareholders see https://www.rossmartin.co.uk/covid-19/4643-covid-19-company-directors-shareholders

This is not HMRC's guidance, but some thoughts based on a director's duties.

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Directors and employees are employed earners for tax and the job retention scheme applies to them.
Sole traders and partners are self employed.
Companies are 'persons' but subject to corporation tax and so none of this applies to such entities.

Guest
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@James is right (although the Schedules aren't used any more) and the Sky'expert' is wrong, dividends are a return on capital, not employment income The scheme is based on PAYE income

Guest
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How about self-employed persons who are not yet affected by corona virus?? (eg delivery drivers)......presumably there will be a restriction if the business is not impacted otherwise open to abuse? Is there any guidance on this?

Guest
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Delivery drivers, might be able to redeploy themselves, it depends on the type of business. The self employment grant is available to anyone who is self employed (meeting the criteria) and affected by this.

Guest
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Would a rental property be deemed as self employed profits? I mean, if it's just a line on the self assessment as 'profits from investment property' as opposed to 'Profit from a self employment 'trading' business..?

Guest
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The relief of the self employed is for people with trading profits, not investment income. Property rental is normally an investment activity.

Guest
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Presumably any amended 18-19 tax returns filed before 23rd of April will be 'risk assessed' like the late ones and it would be prudent to attach as much additional/supporting information as is practical?

Guest
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A self assessment is a self assessment so follow the normal filing instructions. You will need to explain why you are late in notifying any profits and if you have profits you may be subject to a late notification penalty. https://www.rossmartin.c...

A self assessment is a self assessment so follow the normal filing instructions. You will need to explain why you are late in notifying any profits and if you have profits you may be subject to a late notification penalty. https://www.rossmartin.co.uk/penalties-a-compliance/penalties-appeals/721-tax-penalties-self-assessment-late-filing-a-payment-from-201011

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Has my comment been deleted?

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