Yesterday the Government announced measures to support the self-employed during the COVID19 outbreak.
Who is eligible?
- Be self-employed or a member of partnership.
- Have lost trading/partnership trading profits due to COVID-19.
- Filed a tax return for 2018/19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018/19 will have until 23rd April 2020 to do so.
- Have traded in 2019/20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021.
- Have trading profits of less than £50,000 and more than half of your total income come from self-employment. Determined by either of these statement being true:
- having trading profits/partnership trading profits in 2018/19 of less than £50,000
- 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.
Note this will NOT include anybody who trades through a limited company. Government states that directors who trade through limited companies can claim through Job Retention Scheme – you’d have to put yourself on furlough though (see previous newsletters).
What will you get?
- The scheme will provide a grant worth 80% of their profits up to a cap of £2,500 per month.
- HMRC will use the average trading profits from tax returns in 2016/17, 2017/18 and 2018/19 to calculate the size of the grant.
- HMRC will only average the years you have filed a tax return for, eg if you were self employed for only 2017/8 and 2018/19 (and not 2016/17) then they would take the total trading profit for those 2 years and divide by 2 for the average.
- The amounts are based on trading profit not taxable profit which in some cases may differ
- The scheme will be open for an initial three months but may be extended.
- No money is expected to be paid until June.
How do you apply?
- You cannot apply for this scheme yet.
- HMRC will contact you if you are eligible for the scheme and invite you to apply online.
- If you receive tax credits these are included in eth claim as well.
- Once HMRC have received your application they will assess it and tell you how much you get and when.
Other points to note:
- The grant is taxable so will go on next year’s tax return – this is line with employees on the Job Retention Scheme.
- You may be able to apply to your bank for business interruption loan.
- You may be able to apply for Universal Credit through the Dept of Work and Pensions.
- After this is all over the Chancellor indicated that taxes and NI may go up for the self-employed.