UK Government Announces Help for Self-Employed Individuals - Updated content below
On 26 March, as foreshadowed in our note on the Coronavirus Job Retention Scheme, the UK Government announced that help would be available to approximately 95% of self-employed individuals in the UK.
To whom is the assistance provided?
Assistance will be available to individuals who have taxable profits of up to £50,000 per annum.
However, the following self-employed persons will not be covered:
(a)Persons whose profits, averaged over the last three years or such shorter period as the individual has been self-employed have exceeded £50,000 per annum;
(b)Persons who have not filed at least one self-assessment tax return as HMRC (the UK revenue authority) will have no filing record for them; and
(c)Persons who do not derive the majority of their income from their self-employed occupation.
It appears also that individuals who have established a company through which they provide their services will also be excluded. However, we understand that this issue has been raised and may be taken up as the new scheme is addressed.
What assistance is being made available?
Where an individual meets the qualifying criteria HMRC will contact them and will pay a taxable sum equal to 80% of their taxable profits subject to a cap of £2,500 per month. The sum will be taxable and will be paid direct to a qualifying individual's bank account in June 2020.
The self-employed scheme will, as for the Coronavirus Job Protection Scheme, run for three months and will be backdated to 1 March 2020. It may be extended if this proves necessary.
It should be noted that in the announcement the Chancellor, Rishi Sunak, indicated that the National Insurance (Social Security) regime applicable to self-employed individuals may be further aligned with that of employees at some point in the future.
UK Coronavirus – Extension of “Self-Employment Income Support Scheme”
In March 2020 the UK Government announced the creation of the Self Employment Income Support Scheme (“SEISS”). SEISS gives some financial assistance to qualifying self-employed individuals whose business has ‘been adversely affected by coronavirus’. Applications for the initial SEISS payment may be made up until 13 July 2020.
On 29 May, 2020 the UK Government announced that SEISS is be extended. Applicants who met the original SEISS qualifying conditions may make an application for a further grant in August 2020. Eligible individuals may claim a taxable grant worth 70% of their average monthly trading profits covering three months’ worth of profit capped at a total payment of £6,750. Individuals may make a claim in August for the second and final tranche of SEISS even if they did not make a claim for a first payment of SEISS provided they meet the qualifying criteria.
Further information on the second SEISS payment will be available on 12 June 2020.
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