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Help for the self employed

As expected, and mentioned in previous articles, the government are now helping the self-employed.

Below is the key information as shown on their website;

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

You can apply if you’re a self-employed individual or a member of a partnership and you: 

Have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19

Traded in the tax year 2019-20 

Are trading when you apply, or would be except for COVID-19

Intend to continue to trade in the tax year 2020-21 

Have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment.

This is determined by at least one of the following conditions being true:

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

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.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

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.

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

2016 to 2017

2017 to 2018

2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

The Grant will be paid directly into your bank account, in one instalment.

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online. 

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits, you’ll need to include the grant in your claim as income.

Please note that we are waiting to receive the finer details of exactly who falls under this scheme and the mechanics on how it will work as soon as we are aware then we will upload another article.

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Email: admin@mphaccountants.co.uk