COVID-19: Support for the Self-Employed

27th March 2020 Corporate

Yesterday Rishi Sunak, Chancellor of the Exchequer, made a hotly anticipated announcement of plans to provide assistance to self-employed workers during the COVID-19 pandemic. The Self-employment Income Support Scheme (SEISS) will provide a grant worth 80% of trading profits up to a cap of £2,500 a month for those who derive more than half of their income from self-employment.

Who can apply?

In order to be eligible for the SEISS, an individual must:

  • be self-employed, or a member of a partnership;
  • have submitted their 2018/2019 tax return as a self-employed individual (for those who missed the 31 January 2020 deadline, an extension of 4 weeks from 26 March 2020 has been granted);
  • have traded in 2019/20 and intend to continue to do so in 2020/2021;
  • have lost trading profit as a result of COVID-19; and
  • have trading profits of less than £50,000, calculated on trading profits and total income in 2018/2019 or an average of trading profits and total income over the past 3 years (2016-17, 2017-18, and 2018-19).

The scheme is not available for those individuals who operate through a company and pay themselves a salary and dividends through the company. The Coronavirus Job Retention Scheme (announced on 20 March 2020) will be available for those companies who operate PAYE schemes and satisfy the scheme’s eligibility criteria.

At present, the criteria and operation of both schemes means that those company owners who receive the majority of their income from dividends and pay themselves a minimal salary up to the tax-free allowance, find themselves stuck between the SEISS and Job Retention Scheme.

How can I access the scheme?

HMRC will make contact with those eligible according to the existing information recorded in their system, once the scheme is operational. All eligible individuals will be invited to submit an application for the scheme. Any grant paid through the scheme will be paid directly into the individual’s bank account. It is intended that the scheme will run for three months from 1 March 2020 and is expected to be accessible from June 2020.

Further guidance from HMRC can be found here.


Until the scheme is put in place, the self-employed can access universal credit or apply for business interruption loans.

Further information in relation to additional measures for businesses can be found here.

It was interesting to note that when summing up the proposals, Rishi Sunak said

"But I must be honest and point out that in devising this scheme – in response to many calls for support – it is now much harder to justify the inconsistent contributions between people of different employment statuses."….This is a clear statement that the tax rules for the self-employed are likely change in the future to be more aligned with those which apply to those who hold employment status. ​​​​​

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Ruth Pearson is a Trainee Solicitor located in Manchesterin our Trainee Solicitors department

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