Self-Employment Income Support Scheme: eligibility and how to make a claim

The taxman is writing to millions of self-employed workers who may be eligible for its new support scheme.

The coronavirus lockdown has sparked financial worries for a lot of people, but millions of self-employed workers in the UK are in a particularly vulnerable position.

Unlike regular employees, there is no monthly salary to rely on if they are unable to work.

That’s why the UK Government has launched the Self-Employment Income Support Scheme, in a bid to offer these people help, which is similar to support schemes for normal employees.

Now HM Revenue & Customs (HMRC) is writing to around 3.5 million self-employed workers to explain how the scheme works and who may be able to take advantage.

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What is the Self-Employment Income Support Scheme?

The Self-Employment Income Support Scheme allows those who qualify to claim a grant of 80% of their average monthly trading profits.

It is paid out in a single instalment ‒ so the equivalent of getting three months’ worth of money in one go ‒ and is capped at a total of £7,500.

The grant is taxable, so you’ll still pay Income Tax and National Insurance on the money received.

You can still work, start a new trade, or take on other employment if you receive the grant.

When will the grant be paid?

The claims service opens on 13 May. 

According to HMRC, payments will be made to successful claimants’ bank accounts within six working days after the claim is made.

Who is eligible for this scheme? 

The Self-Employment Income Support Scheme has been set up to support people who have been adversely affected by the COVID-19 pandemic.

There are all sorts of circumstances where this may apply. For example, you may be shielding, have caring responsibilities due to the pandemic, or may have had to take on less work as you now have fewer clients.

But it isn’t open to all self-employed workers ‒ you need to meet the following criteria:

• You traded in the tax year 2018/19 and submitted your self-assessment tax return on or before 23 April 2020 for that year
• You traded in the tax year 2019/20
• You intend to continue to trade in the 2020/21 tax year
• Your trading profits are no more than £50,000 and are at least equal to your non-trading income

On this final point, HMRC says it will look at your average trading profit over the last three tax years.

If that average comes to less than £50,000, then you may be eligible for the grant, which will then be paid into your bank account.

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Check yourself and make a claim

HMRC is contacting self-employed workers that it thinks may be eligible by letter, email or text based on information provided in their previous tax returns.

But you can also check for yourself if you may be eligible using this online checker tool. You will need your unique taxpayer reference and National Insurance number to hand in order to use the tool.

Once your check is complete, if you are found to be eligible, you will be provided with a date when you can submit your claim.

Claims can be made online once the service is up and running. If you are unable to make a claim online, HMRC says an ‘alternative way’ will be made available, though it hasn’t yet revealed any details.

Unsurprisingly, HMRC has said it expects its phone lines to be particularly busy over the next couple of weeks as people apply for this scheme.

As a result, it has urged people to only call if they can’t find the information they need from the website, from their tax agent, or via its webchat service.

Slipping through the cracks

Obviously, not all self-employed people are going to qualify for the Self-Employment Income Support Scheme.

You may have higher trading profits for example or have only recently gone self-employed and so don’t have a full year of accounts to use to support a claim.

If you are ineligible, HMRC says it will direct people to guidance setting out why they are ineligible and signpost other support they may qualify for.

This could include Income Tax deferrals, rental support, Universal Credit, and mortgage payment holidays.

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Be wary of scams

It’s worth remembering the coronavirus pandemic has provided quite the boost for scammers, offering them all sorts of opportunities to try to con people into handing over their personal details or cash. 

This latest scheme will do much the same as it’s inevitable that some scammers will send out dodgy emails, texts and the like posing as HMRC and using the Self Employment Income Support Scheme as a front for their phishing attempts.

So, it pays to be extra cautious about any communication you receive related to the scheme.

Don’t click on any links in emails about the scheme – instead go straight to the online checker tool to establish for yourself whether you qualify.

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