Over the past week, the Chancellor and the Government have been outlining the steps to support businesses during this unprecedented time for the UK and world economy. We have received several enquiries from our clients who are self-employed asking how they will be supported during this difficult period. So far, the offer of support from the Government has been limited.
Yesterday the Chancellor, Rishi Sunak unveiled a £9 billion support package for self-employed taxpayers and members of partnerships. This self-employed support 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. The Government have outlined, who can apply; how much you will receive; when you will likely receive it, and potentially how to make an application.
- Who can apply?
HMRC Guidance notes state that you can apply if you’re a self-employed individual, or a member of a partnership, and you also:
- have submitted your Income Tax Self-Assessment Tax Return for the tax year 2018-2019;
- traded in the tax year 2019-2020;
- 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.
Please note the following criteria:
Your self-employed trading profits must also be less than £50,000 and more than half of your income must come from self-employment.
This is determined by the following factors:
- You have 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.
- You have an 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 the years 2016 to 2019, HMRC will only use those years for which you filed a Self-Assessment Tax Return.
IMPORTANT: If you are already late in submitting your 2019 Tax Return, you will have until 23 April 2020 for this to be filed.
- If you qualify, what will you actually receive?
You will get a taxable grant payment paid directly into your designated bank account, which will be 80% of the average profits from the tax years (where applicable):
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
To calculate the average, HMRC will simply add the profits from each year and divide by 3.
It will be up to a maximum of £2,500 per month initially for 3 months.
- When will this be available?
This will not be immediate. HMRC plans to be able to offer access to the scheme no later than the beginning of June 2020, when the relevant HMRC departments will contact those eligible directly and ask them to complete an online form. Successful applicants will have payments made directly into their bank account, and will be this payment will be backdated to 1 March 2020, meaning a self-employed taxpayer will receive 3 months’ money in one go.
- How/when do you apply?
As stated above, you currently cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
HMRC have instructed that self-employed Individuals do not need to contact them now, as all this will do is delay the urgent work being undertaken to introduce the scheme.
Of course, our team at White Hart Associates will keep you updated as and when we receive the latest information.