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Despite the Chancellor’s saying that the package for the self-employed provides parity with employees, there are some very material differences.
The first is the scope of eligibility. There appears to be no support at all for anyone with an income in excess of £50,000 per annum.
To be eligible for the support, the individual must meet all of the following criteria:
The support consists of a taxable grant equivalent to 80% of the average monthly profits over the last three years, up to a maximum of £2,500 per month. The grant currently covers three months’ profits, i.e. a maximum of £7,500.
Profit 2016/17 £47,000
Profit 2017/18 £49,000
Profit 2018/19 £52,000
Average annual profit £49,333, therefore eligible for the grant.
Average monthly profit £4,111, therefore the grant is capped at £2,500 per month.
Taxpayers do not need to do anything at the present time as HMRC will be driving this process and will invite applications from eligible taxpayers. It is expected that grants will be paid by the end of June, i.e. at the end of that three-month period. Universal credit and similar existing benefits are available until then, as well as the loan support previously announced.
Contractors operating through Personal Service Companies are not included as self-employed. There is still some dispute over how these taxpayers will be supported.
The Government website states, “Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.” However, as a matter of Company Law it is not possible for Directors to be furloughed, furloughing being one of the conditions of the CJRS.
If you have questions on this guidance, please contact us.
27 March 2020
The information contained in this guidance has been obtained from public sources and every attempt has been made to ensure its accuracy at the date of publication. In this ever changing environment, this information is subject to change and we will not accept liability for losses arising from changes in the law or the interpretation thereof.