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Measures due to COVID-19

Covid-19 Self-Employed Tax Measures

Support for Self-Employed

This is a new and temporary measure only. After the end of the epidemic or stabilization of the situation, this approach will be terminated.


The government has now unveiled income support for self-employed people who are facing financial difficulties due to the ongoing coronavirus (COVID-19) health crisis. This promises help for hairdressers, builders, childminders and taxi drivers with financial package, being one of the measures intended to help private sector during coronavirus outbreak.

1. Income Support Scheme

New support measure covers more than five million self-employed workers in the UK.

Do I qualify for the scheme?

  • A self-employed person can apply for this support if he/she meets the following conditions:
    a) A self-employed can be individual or a member of a partnership.
    b) More than half your income must come from self-employment trading profits.
    c) Trading profit must be less than £50,000.
    d) You filed an Income Tax Self Assessment tax return for the tax year 2018-19.
    e) You traded in the tax year 2019-20, are trading at the time when you apply for the support scheme, and you intend to continue to trade in the tax year 2020-21.
    f) You have suffered a loss of trading/partnership trading profits due to the coronavirus crisis.

What is the essence of the support?

The main idea is that the self-employed workers may claim a taxable grant worth 80% of trading profits over the last three years up to the value of £2,500 per month.

This support is initially intended to operate for 3 months to cover loss of earnings during March, April and May; it is possible that the scheme will be extended.

What to do if I have not had time to file my tax return?

If you have not submitted Income Tax Self-Assessment tax return for the tax year 2018-19, it is still possible to do so between now and 23 April 2020.

When will this support package be available?

The government have indicated this support will be available from June 2020.

How do I calculate trading profit?

Trading profits should be calculated based on either your 2018/19 tax return or the average of 2016/17, 2017/18 and 2018/19 tax returns. In second case HMRC will add together the total trading profit for the 3 tax years then divide by 3, and use this to calculate a monthly amount.
If you started trading between 2016 and 2019, HMRC will only use the years for which filed an Income Tax Self-Assessment tax return. More detailed information see in an example below.

What if my business was loss-making?

The support is based on average monthly profits. Therefore, if your business was loss-making you will be ineligible for this measure.

What is the maximum amount of support?

£2,500 per month. At present, the support package is only available for 3 months (and the maximum claim available is £7,500).

Should I stop working?

Your eligibility for the current support package will not be impacted by your decision to stop work but if the scheme is extended and you do not work when you are able to, it is possible that new restrictions will be introduced.

What support is available if I am employed?

The government has asked businesses not to lay off staff due to COVID-19, and has promised to help support them financially instead. The Coronavirus Job Retention Scheme is offering to pay employees 80% of their wages up to a maximum of £2,500 per month.
Employees impacted by the Coronavirus Job Retention Scheme will be classified as furloughed workers, meaning that they are kept on employer’s payroll, rather than being laid off. Employees cannot work for other employers whilst they are on furlough.
Employers may opt to voluntarily fund the differences between this furlough payment and salary.

What to do if I do not qualify for the scheme?

You may be eligible for Universal Credit. Any grant under Universal Credit will be treated as earnings.
You may use money he/she has set aside for tax, to cover current expenses. Preliminary information indicates that the July self-assessment tax payment can be deferred until January 2021.
You may be eligible for a business interruption loan scheme (CBILS).

2. Application Process

The government is working to ensure that the support process is automated and does not require additional action from self-employed people.

How do I apply to the scheme?

Self-employed people cannot apply for this measure yet. HM Revenue & Customs will contact eligible self-employed individuals and provide access to online application.
After providing such access, self-employed will be asked to fill in an online form. This scheme will work only through GOV.UK.
Subject to a successful application, HMRC notify you to confirm how much you will receive and will confirm the payment details. The support will then be paid directly into your bank account.
If you claim tax credits you will need to include the grant in a claim as income.
If you believe you are eligible and have not been contacted by HMRC, we recommend that you contact HMRC. Their contact details are available from https://www.gov.uk/contact-hmrc

Paying back

There is no information regarding paying back of such support in any case, even if there is high overall earnings in 2020/21.

3. Income Support Scheme example

For example, self-employed worker has been carrying out activity for 3 years. His/her profit for 2016/17, 2017/18, 2018/19 years amounted to £55,000, £60,000, £50,000 respectively. His/her trading profit for 2016/17, 2017/18, 2018/19 years amounted to £45,000, £50,000, £40,000 respectively.

Qualifying test

  • In the beginning, the self-employed must pass the qualifying test.
    A self-employed person should answer “yes” to all following questions:
    1) Is a self-employed individual or a member of a partnership?
    2) Did self-employed file an Income Tax Self Assessment tax return for the tax year 2018-19.
    3) Did self-employed trade in the tax year 2019-20?
    4) Is self-employed trading at the time when he/she applies for the support scheme?
    5) Do self-employed intend to continue to trade in the tax year 2020-21?
    6) Have self-employed suffered a loss of trading/partnership trading profits due to the COVID-19.

Trading profit test

  • If the self-employed passed the qualifying test, he/she can try to pass the trading profit test.
    1) Average trading profit must be less £50,000. Calculation: (£45,000+ £50,000+ £40,000) / 3 years = £45,000.
    2) More than half income must come from self-employment trading profits. For 2016/17: £45,000 / (£45,000+£10,000) *100% =81.8% > 50%.
    For 2017/18: £50,000 / (£50,000+£10,000) *100% =83.3% > 50%.
    For 2018/19: £40,000 / (£40,000+£10,000) *100% =80% > 50%.

Our self-employed worker passed both tests, he/she can apply for support under this measure.


  • 1) The self-employed worker’s total trading profit is £45,000 + £50,000 + £40,000 = £135,000.
    2) Average monthly profit is £135,000 / 36 monthes = £3,750.
    3) Self-employed workers may claim a taxable grant worth 80% of trading profits up to the value of £2,500 per month. Therefore, 80% of average monthly profit is £3,750 * 80% = £3,000 > £2,500. Thus, a grant is £2,500.


The Self-employment Income Support Scheme is a new temporary measure only through which self-employed workers will be able to apply for taxable grants worth up to 80% of their average monthly profits to combat loss of income due to the COVID-19 pandemic.

Due to the fact that the situation is changing rapidly, the provisions may be changed or updated in the near future.

For help or further information on any of the points above contact either Mikita Makayou at or Dr Clifford Frank.

Tel: 020 -7887-1948