Millions of self-employed workers can now apply for grants of up to £7,500 as part of the UK Government’s Self-Employment Income Support Scheme (SEISS).
The scheme opened for claims on Wednesday and offers grants worth up to 80 per cent of average trading profits for those stuck at home during the Covid-19 pandemic.
Everyone eligible for the SEISS will be able to receive the grant by May 25, or within six days of a completed claim, the Government has said.
It is the biggest direct financial support package for freelancers and the self-employed since lockdown started, and claims for lost work can be dated back to March.
The UK Governmen t has not said whether it will be extended in line with the furlough scheme protecting 80 per cent of employees' wages up to £2,500 a month.
The process will be run by HM Revenue & Customs, which has been operating and overseeing loan schemes and the UK Government's furlough payments.
Chancellor Rishi Sunak said: "With payments arriving before the end of this month, the self-employed across the UK will have money in their pockets to help them through these challenging times."
Those able to make a claim have already been contacted by HMRC and can use a unique reference to proceed with their application.
Derek Cribb, chief executive of IPSE (the Association of Independent Professionals and the Self-Employed), said: "For the self-employed, coronavirus is not only a health crisis, but also a pressing income crisis.
"We are delighted that the Government has heeded much of IPSE's advice by setting up the Self-Employment Income Support Scheme, which extends a much-needed lifeline to those self-employed people who are eligible for it."
Mike Cherry, national chairman of the Federation of Small Businesses, said: "The self-employment income support scheme represents a lifeline for the millions of self-employed people who are expected to qualify.
"I would encourage all those who think they are eligible to use the online checker if they've not done so yet, and to apply on the date allocated.
"We are particularly pleased to see the scheme opening earlier than scheduled, with a simple fast-track application and a promise for speedy payment."
In an interview with the BBC, Mr Sunak was asked if he would extend the grants, and replied: "We're looking at the best thing to do but... the reason for that is slightly different in that many of those self-employed people are not in sectors which are necessarily closed or have an employer who has reduced their hours.
"It is a slightly different scheme which I was clear about at the beginning, but what I would say to those people, millions of those people who are eligible, ahead of schedule the scheme is now open, they can apply this week, they'll be getting the emails and they will have the same amount of support based on their historical earnings... by the end of the month."
Mr Sunak also said the furlough scheme is "costing in the run rate of around £8 billion per month at the moment" and added it "breaks my heart" that people have lost their jobs as a result of the crisis.
Who can apply for the Self Employed Income Support Scheme?
You can apply if:
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You have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
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Traded in the tax year 2019-20
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Are trading when you apply, or would be except for Covid-19
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Intend to continue to trade in the tax year 2020-21
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Have lost trading/partnership trading profits due to COVID-19
Another criteria that must be met is that the applicant's self-employed trading profits must be less than £50,000. In addition, more than half of their income must come from self-employment.
The Government guidance states : "This is determined by at least one of the following conditions being true:
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Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
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Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period.
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
How much will you get?
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
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2016 to 2017
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2017 to 2018
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2018 to 2019
To work out the average HMRC will add together the total trading profit for the three tax years (where applicable) then divide by three (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for three months and paid directly into your bank account - in one instalment.
How to apply
The scheme opened for application at 8am on Wednesday, May 13.
HMRC should have contacted you if you are eligible and invite you to apply online.
Further advice on the gov.uk website adds: “Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.”
For more information about the scheme, visit the gov.uk website here.
