Self-employed financial support extended until April 2021

Amidst the frequent updates on the lockdown and extension of the furlough scheme - not to mention the drama of the US presidential election - the extension to the self-employed scheme has received comparatively little attention.

The first grant for the self-employed under the initial scheme provided support of up to 80% of profit for three months (capped at £7,500 in total). The scheme was then extended for a further three months, with the second grant being paid at a reduced rate of 70% of profits (with the three-month grant capped at £6,570 in total), corresponding to the tapering of the furlough scheme. This ended on 19 October 2020.

The latest extension, coinciding with the new lockdown, initially reverts to the more favourable level of support available under the first grant. While the Tiers 1 to 3 regional restrictions were in place, the government had previously announced a third grant to cover 20% of average trading profits for three months (capped at £1,875) for November to January. This was subsequently doubled to 40% (with a £3,750 cap), and then it was announced that the first month of the three-month grant would be increased to 80%, making the full grant 55% for the three months. Finally, on 5 November 2020, the Chancellor announced that all three months of the third grant would be calculated at 80% (with a £7,500 cap).

What do we know about the latest extension of the scheme?

The increase to 80% for the full three-month period will no doubt be welcome news to the self-employed as we enter the national lockdown. The online service for claiming the grants will be available from 30 November, and the government has said that further details will be provided in due course. From the information published so far, we know that:

• The extension will cover two separate grant periods, with lump sum instalments being paid for the periods November 2020 to January 2021, and February to April 2021.

• The eligibility criteria will be the same as the initial scheme (submission of tax return for 2018/19, trading in the tax year 2019/20 and intending to continue to trade but for the impact of coronavirus and have average trading profits of £50,000 or less). However, individuals do not need to have made a claim for either of the previous two grants in order to make a claim under the new extended scheme.

• The third grant, covering the period 1 November 2020 to 31 January 2021, will be calculated at 80% of three months’ average monthly trading profit (using the same calculation method as the initial scheme), capped at £7,500 in total, and to be paid out in a single instalment.

• As previously, the grants will be subject to tax and National Insurance contributions.

Details about how to apply for the grant will be published in due course, although the claims process is likely to be similar to the previous scheme.

The level of the fourth grant covering the period 1 February to 30 April 2021 has not yet been announced. The government will no doubt want to wait and see what level of restrictions are in place before considering whether it can feasibly reduce the level of support for February onwards.