Self-employed: Coronavirus

Treasury written question – answered on 21st May 2020.

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Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

To ask the Chancellor of the Exchequer, if he will make it his policy to calculate levels of covid-19 related grants to the self-employed on the basis of turnover rather than profits.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

To ask the Chancellor of the Exchequer, what assessment he has made of the effect on the finances of self-employed people working in the creative industries of calculating levels of covid-19 related grants on the basis of profits rather than turnover.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The Self-Employment Income Support Scheme (SEISS) allows eligible individuals to claim a taxable grant worth 80 per cent of their average monthly trading profits, paid out in a single instalment covering three months, and capped at £7,500 in total. This scheme is intended to support individuals who rely primarily on their trading profits from self-employment and who have been adversely affected by COVID-19.

The self-employed are a very diverse population. They have a wide mix of turnover and profits, with monthly and annual variations even in normal times. The SEISS is based on trading profits, as providing support on the basis of an individual’s past turnover would be unfair. For example, an individual could have had a high turnover, but have made a loss. A turnover-based system would provide more support to such an individual than to an individual with a lower turnover who made a profit.

More information about how income and trading profits are calculated can be found at www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme.

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