Following the Government statement in relation to support for the Self Employed, we provide a brief update to the Scheme as HMRC move toward making contact with you this month.

If you want to know more detail about the Scheme, follow this link:

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

  1. Introduction
  • Self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month;
  • If you only had a few months’ self-employment in the last tax year (2018/9), your earnings will be counted as your total profit for the year;
  • In other words, the Government will not pro-rata your earnings based upon the number of months represented by the income earned to arrive at a monthly profit.
  • The grant is taxable upon your 20/21 tax return;
  • Unlike the employee scheme, the self-employed can continue to work as they receive support;

 

  1. When Will The Support Be Available?
  • Initially, this grant will be available for three months in one lump-sum payment;
  • This is a temporary scheme, but it may be extended;
  • The money will arrive directly into people’s banks accounts from HMRC, but not until June.

 

  1. How Much Will I Get?
  • You’ll get a taxable grant based on your average trading profit over the last 3 tax years:
  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019
  • HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then they will divide by 3.
  • The grant will be 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.

 

  1. Am I Eligible?
  • You are eligible for the Scheme if:
  • you have filed a tax return for 2018/19
    • which indicates that you were self-employed prior to 6 April 2019; and
    • your 2018/19 return was filed by 23rd April 2020
  • you were trading in the last financial year, still trading now, and plan to continue doing so this year;
  • your trading profit was:
    • less than £50,000 in 2018-19 (even if prior year earnings average above £50,000 per annum, or
    • on average less than £50,000 based upon earnings from 2016-17, 2017-18 and 2018-19.
  • at least half your income needs to have come from self-employment as registered on the 2018-19 tax return filed in January
    • if this was not the case in 2018/19, then HMRC will take the average of your 2016/17, 2017/18 and 2018/19 tax returns to ascertain eligibility for the Scheme:
  1. What If I Have Just Started in Self Employment?
  • Sadly, the Scheme does not cover people who only became self-employed very recently
    • The Chancellor said potential Claimants would have to look to the benefits system for support.

 

  1. How Do I Access the Scheme?
  • You do not need to contact HMRC, if you are eligible HMRC will contact you directly;
  • It is anticipated currently that you will be contacted by mid May to invite your application;
  • You will then be invited to claim;
  • The online service you’ll use to claim is not available yet;
  • The claim will be made using the GOV.UK online service
  • When you make your claim, you will need:
  • Your Self Assessment Unique Taxpayer Reference (UTR) number, if you do not have this please contact us or HMRC;
  • National Insurance number;
  • Government Gateway user ID and password
  • bank account number and sort code you want the grant paid into (only provide bank account details where a Bacs payment can be accepted)

 

  1. What Happens After I Have Claimed?
  • Once you’ve submitted your claim, you will be told straight away if your grant is approved.
  • HMRC will pay the grant into your bank account within 6 working days.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.