Chancellor Rishi Sunak has given details of a new scheme to help self-employed people that are losing work due to the coronavirus outbreak.
Millions of self-employed workers will get direct cash grants though the UK-wide Self-Employed Income Support Scheme. Eligible applicants will receive a cash grant worth 80% of their average monthly trading profit over the last three years. These payments will be paid for at least three months and will be capped at £2,500 per month.
According to the government, the new scheme covers 95% of people who receive the majority of their income from self-employment. However, chancellor Rishi Sunak admitted that the payments will not be made until the beginning of June - with grants being paid then in a single lump sum covering all three months.
Self-employed people will be able to apply directly to HMRC for the taxable grant, using an online form, with the cash being paid directly into their bank account.
However, the government says individuals should not contact HMRC now; it says HMRC will identify eligible taxpayers and contact them directly. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
"Self-employed people are a crucial part of the UK's workforce who've understandably been looking for reassurance and support during this national emergency," said chancellor Rishi Sunak.
"The package for the self-employed I've outlined today … targets support to those who need help most, offering the self-employed the same level of support as those in work."
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. To qualify, more than half of their income in these periods must come from self-employment.
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.
The scheme has been designed after extensive engagement with stakeholders including the TUC, the Federation of Small Businesses (FSB) and The Association of Independent Professionals and the Self-Employed (IPSE).
In a sign of changes to come, the chancellor also said that tax rules for employees and the self-employed should be brought into line at some point in the future.
Written by Rachel Miller.