Chancellor announces financial support for some of the self-employed impacted by Covid-19
By John Brace (Editor)
The Right Honourable Rishi Sunak MP (the Chancellor of the Exchequer) announced today (26th March 2020) the government’s plans to support the self-employed (which the author of this piece will declare as an interest).
Those eligible will be written to by HMRC (Her Majesty’s Revenue and Customs) and asked to apply online. However there are caveats:-
- The cash grant will be classed as taxable* income and will not be paid till June 2020 (which will be a lump sum covering the next 3 months period). *The Chancellor gives with one hand and takes away with the other.
- Those who pay themselves a salary and dividends through personal service companies don’t qualify for this.
- There are further details on the HMRC website here.
- It also applies to partnerships.
- It only applies to those who have lost trading or partnership trading profits due to COVID-19.
- There is a maximum of £2,500 a month and it looks like this will just be a one-off.
- For those on tax credits, it will need to be declared as income.
- There are many other caveats and loopholes (such as a requirement that more than half a person’s income must be from self-employment).
- Essentially for those who do apply, it will be calculated at 80% of the monthly profits over the tax years 2016-17, 2017-18 and 2018-19.
- The above is not meant as accountancy or tax advice.
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2 thoughts on “Chancellor announces financial support for some of the self-employed impacted by Covid-19”
Small businesses like the one I work for are still waiting for the end of April when the online portal for the Coronavirus Retention Scheme is supposed to go live. Not sure any of us will be getting 80% of our salaries at the end of April with no cash-flow happening in the meantime to pay us.
Thanks for that comment – payroll is such a large part of the cost structure of most organisations.
There are other sources of financial support beyond the Coronavirus Retention Scheme for some small businesses that qualify.
I would’ve thought that some businesses would have cash reserves or could just sell more shares in the business during times like these (or have some sort of business interruption insurance to claim from)? Certainly it isn’t going to be an easy trading environment, or are profit margins not what they used to be?
In the area I work in (the media) advertising revenue that funds for example my post depends on the health of the wider economy not just here in the UK – but elsewhere too. I’ve made attempts to diversify beyond that though.
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