People all over the world have had their working lives completely transformed over the past few months due to the effects of coronavirus (COVID-19). All industries have been forced to adapt and many individuals have seen their income diminish or disappear completely.

Initially, the UK government talked about business bailouts and introduced the Coronavirus Job Retention Scheme for companies to claim back 80% of employees’ wages up to £2,500 a month in order to avoid mass redundancies.

However, the self-employed ­– of which there are more than 5 million in the UK, representing 15.3% of the labour market at the end of 2019 – were left wondering whether there was any support coming their way and what steps to take next to keep themselves and their families afloat.

Now that the government has announced the Self-Employment Income Support Scheme, many will be able to claim financial help similar to that provided to those employed and paid via PAYE. The scheme is designed to provide short-term financial relief for many self-employed people who are getting less work or no work at all during the COVID-19 pandemic.

There are still terms and exclusions in place, so if you are confused about whether you may be eligible and what to do next, here are five main points to consider:

What is available?

Grants will be available to cover 80% of trading profits up to £2,500 a month for an initial period of three months – though this may be extended. These will be subject to Income Tax and National Insurance contributions but will not need to be repaid. Any grant you receive will be paid into your bank account in one instalment. If you receive a grant you can continue to work or take on other employment including voluntary work.

Who can claim?

There are a number of criteria in place to qualify for the Self-Employment Income Support Scheme. You can only apply if you:

• are self-employed or a member of a trading partnership
• have submitted your Self Assessment tax return for the tax year 2018 to 2019, as HMRC will use this data to identify those eligible
• traded in the tax year 2019 to 2020, are trading when you apply (or would be trading except for coronavirus) and intend to continue trading in the tax year 2020 to 2021
• have lost trading profits due to coronavirusIn addition, you must have trading profits of less than £50,000 and derive at least half of your profits from self-employment. This can be calculated from the tax year 2018/2019, or as an average of previous tax years.

What should I do if I think I might be eligible?

At the moment you don’t need to do anything, as HMRC will use existing information to identify those who may be eligible and aim to contact them by mid May. You will then be invited to claim via the gov.uk website. If you’re unable to claim online, an alternative way to claim will be available.

Please Note: You will only be able to claim using the gov.uk online service. If you receive texts, calls or emails claiming to be from HMRC and asking you to follow links or reveal personal information, it is a scam.  

Can I still apply for Universal Credit?

You can claim Universal Credit while waiting for a grant, but once you do receive a grant it will be treated as part of your self-employed income and may affect your entitlement to future Universal Credit.

What happens if I’ve received payment for work in the form of a loan?
If the loan is covered by the loan charge you may still be able to claim.  Your eligibility will be calculated based on an average of the tax years 2017/2018 and 2018/2019. If you have not yet filed your 2018/2019 Self Assessment tax return you have until 30 September 2020 to do so.

Other support for the self-employed
To relieve further pressure over the coming months, HMRC are providing the option to defer the second payment on Self Assessment tax accounts, which would have been due by 31 July 2020. You can choose to delay the payment until 31 January 2021 – though your first payment for the following tax year would still be due on this date as well.

* This is our understanding of Government’s proposals so far and these may be liable to change if further regulations are introduced.

To keep up to date with the support on offer for the self-employed during the pandemic, visit gov.uk.