Self-Employed Income Support – our initial analysis and advice


Not sure if the scheme will benefit you? Richard Starkey has taken a good look at the chancellor’s latest initiative, and here are his thoughts…


Last night, the chancellor revealed the much-anticipated Self-Employed Income Support Scheme, the details of which were of particular interest to many of our clients here at Business Control. We were being asked questions such as: Would the package be suitable for directors of companies? Would it offer help to all sole traders, regardless of income? Would the recently self-employed be covered?


As it turned out, the answer to all these questions was no.


On the whole, I think I think it’s a good initiative. Yes, it only fills 90% of the gap, but the support it does provide to the millions who qualify is unprecedented. Essentially, the government will take the average of three years’ profits – note that it’s profit and not turnover – and provide a direct cash grant of 80% of those profits, up to a value of £2,500 per month.


And while this will be welcome news to the painters and decorators, the sports coaches, the cleaners, the freelance writers and all the micro business owners out there, the rub is that the money won’t be available until June, which is a few months away. 


How does one get from now to then with no money coming in? You might be able to get an interruption loan from a bank, but it is a loan at the end of the day; it’ll have to be paid back. And of course, you’ll need to present the bank with a firm business case for that loan – and who’s to say that your business is going to be viable by the time this is all over?

I’m hoping that these people will have savings that carry them through, but I suspect many won’t, and that’s cause for concern. As is the fact that the directors I mentioned earlier, those who became self-employed since April or May 2019, and those whose profits exceed £50,000 won’t be able to access any financial support except Universal Credit. 


The details

But enough of the drawbacks, let’s take a look at the positives and how the support is being administered. Those who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into their bank account.


The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. Grants will be paid in a single lump sum instalment covering the three months to May 2020, and will start to be paid at the beginning of June. As an aside, we’ve run the figures here for our eligible clients and will be getting in touch shortly to let them know what they can expect to receive.


Who can apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • 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
  • have lost trading/partnership trading profits due to COVID-19



Cash grants 

In addition, the Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. 


However, businesses which don’t pay business rates are not included in this scheme.


The grants are staged and so businesses in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000. Businesses with a property that has a rateable value of between £15,000 and less than £51,000 will receive a grant of £25,000.



How to apply

Perhaps understandably, given that it’s a complex and completely new support scheme, you cannot apply for it just yet. The early indications are that HMRC will contact you if you are eligible for the scheme and invite you to apply online.


Again, it’s a case of watch this space! We’ll bring you the details as soon as we know more. 


Don’t forget to check out the rest of our Accounting for COVID-19 blogs here, and please check back periodically to get the very latest insight and information from the Business Control team.


Better still, you can access a whole host of resources for business owners including blogs, smart guides and infographics for free. Simply opt in here

Business Control Limited
Red Lion Yard,
Odd Down,
Bath, Somerset,
BA2 2PP,
United Kingdom

Registered in England
No.: 04516455

ICO Registration
No.: ZA428499

Call: 01225 840538