How does it work?

  • Self-employed people will be able to apply for a taxable grant worth 80% of their average monthly profits, up to £2,500 a month.
  • HMRC will use the average profits from tax returns in 2016/17, 2017/18 and 2018/19 to calculate the size of the grant.
  • In addition to the taxable grant, if you are able to trade you can continue to do so.
  • Payments will be paid by June (backdated to the 1st of March).
  • For those struggling with cash flow in the meantime, the Chancellor recapped some of the other support measures available; business interruption loans, deferred payments on account until January 2021 and Universal Credit.

Who can get it?

  • Self-employed individuals (including members of partnerships) whose income has been negatively impacted by Covid-19.
  • This will be available for those with trading profits of up to £50,000.
  • If you have trading profits of over £50,000, you will not be eligible for support (the chancellor suggested this would affect ~5% of the self-employed workforce).
  • You need to have completed your 2018/19 tax return. If you haven’t yet, you get an additional four weeks from today to complete it.

What happens next?

  • HMRC are working on it urgently, and it’s expected no later than the beginning of June.
  • If you’re eligible, HMRC will contact you directly, ask you to fill out an online form, then pay the grant straight into your bank account.

We believe the government can do more

It certainly feels like a generous package for some and we’re grateful to the Chancellor for a fast response. However, there are some big holes in the plan.

There are millions who cannot wait until June to receive support. They are struggling today to pay bills, mortgages and buy food. We will be writing another letter to the Treasury committee to push for this to be changed.

Those that operate a Limited Company are not being given fair support. Many self-employed people do this because it’s the only choice given to them by their clients.

By only relying on 3 years of Self-Assessments up to 5th April 2019, those who became self-employed more recently may only have partial earnings to go on or could be missed entirely, and those who are eligible for the funding could be looking at out-of-date earnings.

Despite the chancellor saying “there’s nothing we can do” for those who have been self-employed for one year or less, we believe they can help them by accepting their 2019/20 tax returns, which can be submitted from 6th April, to calculate their average trading profits. We have the technology to support the fast creation of Self-Assessments, and we’re working to make it more widely available now.

What we're doing

We will lobby the government to encourage them to allow self-employed people to submit their 2019/20 Self-Assessment when the window opens on the 6th April and use this up-to-date data for consideration in their application for support, increasing the number of self-employed people that are eligible.

To help make this happen, we are launching a free-to-use web tool on 6 April, built on our existing accounting and tax technology. This will be made available to everyone, regardless of whether you are a Coconut customer or not, and users will be able to connect their existing bank account from 20 major UK banks and within minutes your transaction data will be analysed and categorised for tax giving a clear and simple overview of total income and total allowable expenses, ready to submit to HMRC.

We can't make any guarantees that the government will accept this, but we want to be ready if they do so we're going ahead. We're going to keep fighting to get this accepted.

To hear more on this as it develops, as well as more information on the Self-Employment Income Support Scheme, including details on how to apply, as the government releases more information, sign up for updates.

Who is Coconut?

We're on a mission to make self-employment easier than being employed. To do that, they’ve crafted an intelligent financial companion. With expenses, invoicing and tax all in one, Coconut is the ultimate accounting and tax tool for self-employed people.

Self-employment and entrepreneurship is the biggest shift in the way we work for a generation, and we’re building Coconut to enable this economy to boom.