HM Revenue and Customs (HMRC) is now accepting applications for a second support grant for millions of self-employed individuals whose livelihoods have been impacted by the COVID-19 pandemic.
Chancellor Rishi Sunak announced the Self-Employed Support Income Scheme earlier this year to support small businesses and entrepreneurs struggling to stay afloat in the economic fallout of the pandemic. Under this scheme, eligible self-employed workers can receive two grants from HRMC, which will be taxable, but need not be repaid.
As of Monday, August 17th, applications for the second grant are now open for applications. Eligible individuals can claim up to 70% of the value of their average monthly trading profits from the government.
The grant covers three months’ worth of earnings and is capped at a maximum amount of £2,190 per month (or £6,570 in total). The payment will be made in a single monthly instalment after assessing eligibility and tax returns.
The second round of funding is slightly less generous than the first round, which offered to cover 80% of applicants’ average profits up to a maximum of £7,500, paid in a single instalment. However, it is still a welcome relief to business owners who are yet to fully recover from the economic shock as a result of countrywide lockdowns and the implementation of social distancing measures over the past few months.
It is important to note that applicants need not have applied for the first round of grants, which closed on 13th July, to apply for the second.
Around 2.7 million people applied for the first round of funding, which saw the government pay out around £7.8 billion. Another 3 million people are eligible for the second round of funding. Since this will be the final hand-out from the government under its currently announced support schemes for the self-employed, it is likely to have an even more significant uptake than the first.
HMRC also recently admitted that thousands of applicants were paid too much following the first round of funding, with around 15,000 payments (less than 0.6% of the total claimed) having been miscalculated. However, the tax authority is not planning on demanding any repayment from business.
The Association of Independent Professionals and the Self-Employed have welcomed the second round of grants, while still maintaining that the government must consider further measures to support the self-employed in the difficult months ahead.
Unfortunately, the government’s support does not extend to a number of self-employed people including freelancers, the newly self-employed, as well as directors who pay themselves in dividends, who have raised concerns over their ability to navigate the crisis without financial support.
Experts have already cautioned the government against prematurely cutting down on financial support measures for both, the self-employed as well as employed workers. The coming months are expected to see a second wave of the deadly virus which will not only pose a major health risk, but also throw millions of people into economic turmoil as businesses struggle to cope with continuing lockdown restrictions.