This scheme is open to self-employed individuals or a member of a partnership (I can only assume that this also includes LLP members – but care if the salaried member rules are in point) and have lost income due to the coronavirus. This scheme will allow you to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Written on March 29, 2020 by Xeinadin Group
Who can apply:
You can apply if you are a self-employed individual or member of a partnership and have:
- Submitted a 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.
Self-employed trading profits must also be less than ₤50,000 and more than half of income from self-employment. This is determined by at least one of the following conditions:
- Having trading profits/partnership trading profits in 2018-19 of less than ₤50,000 and these profits constitute more than half of 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 average taxable income in the same period.
If trading started between 2016-19, HMRC will only use those years for which a tax return was filed.
If you have not submitted your 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.
How much is available:
You will 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.
HMRC will pay the grant directly into your bank account in one instalment.
How to apply:
The scheme is not open yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online.
The scheme will be available via GOV.UK.
After the application:
Once HMRC has received the claim and you are eligible for the grant, HMRC will contact you to tell you how much you will get and the payment details. It isn’t expected that the scheme will be up and running before June.
If you claim tax credits, you’ll need to include the grant in your claim as income.
Other assistance for the self-employed:
- Deferral of self-assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020.
- Grants for businesses that pay little or no business rates.
- Increased amounts of Universal Credit.
- Business Interruption Loan Scheme.
- If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme. However, there is a general consensus that putting a director on furlough (depending on how many directors there are) could be considered mothballing the business as how can it run without directors.