COVID-19: Self-Employment Income Support Scheme

 Self-Employment Income Support Scheme

Last night, the Chancellor announced that self-employed people will be able to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months.

We hope the following guidance, will provide some clarity for all those affected. 

If you need help on making a claim or advice on any of the schemes, please call 01454 619900 or email your Client Partner directly. 

Eligibility

If you are self-employed or a member of a partnership, you can apply if the following criteria are met: 

  • 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. 

Taxable Grant

If you are self-employed or a member of a partnership, you will receive 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.

If you only have 2 years worth of accounts, please write to HMRC directly and they will assess your situation. We are more than happy to provide support on this if required. 

It will be up to a maximum of £2,500 per month for 3 months and will be paid directly into your bank account, in one instalment.

How To Access The Scheme

Unfortunately, you cannot apply for this scheme yet. Please do not contact HMRC as doing this will only delay the urgent work being undertaken to introduce the scheme.

HMRC will contact you if you are eligible for the scheme and invite you to apply online through the Government website, GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

What Happens Next

Once HMRC has received your claim and you are eligible for the grant, they 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.

What Other Support Is Available?

The Government is also providing a range of additional help for the Self-Employed including:

Deferring VAT and Income Tax Payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

How To Access The Scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

How To Access The Scheme

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

Job Retention Scheme

If you are a Director of your own company and paid through PAYE you may be able to get support under the Coronavirus Job Retention Scheme.

This scheme enables all UK employers to access support to continue paying part of their employees’ salary for those that would have otherwise have been laid off during the crisis.

How To Access The Scheme

You will need to: 

• Designate affected employees as ‘furloughed workers’ (workforce who remain on payroll but are temporarily not working during the coronavirus outbreak) and notify your employees of this change.

• Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

To learn more about how to access the scheme, click here.

Business Interruption Loan Scheme 

For small and medium sized businesses, the new Coronavirus Business Interruption Loan Scheme is now available for applications. This scheme will help any viable business with a turnover of up to £45m to access government-backed finance of up to £5 million. Interest payments and any lender-levied fees for businesses will be covered by the Government for an initial period of up to twelve months.

The government will provide lenders with a guarantee of 80% on each facility to give lenders further confidence in continuing to provide finance to SMEs. The scheme is available through more than 40 accredited lenders, which are listed on the British Business Bank website. 

To view the list of accredited lenders, click here

Small Business Grant Scheme

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Eligibility

You are eligible if: 

  • Your business is based in England
  • You are a small business and already receive SBRR and/or RRR
  • You are a business that occupies property

How To Access The Scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

To find your Local Authority, click here.

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