COVID-19. Government support for the self-employed

Further detail on the support available

The government has announced the eagerly anticipated support for self-employed individuals during the COVID-19 outbreak and it is well aligned with the support it has provided to employees.

The following key points have emerged:

The scheme allows self-employed individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next three month. The period will be extended if necessary.

If you are a self-employed individual/member of a partnership you will be eligible if you:

• 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

You self-employed trading profits must also be less than £50,000 and more than half of your income 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 2016-2019, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you’ve become self-employed since April 2019, you will not be eligible.

If you have not yet 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 carry out their usual checks under self-assessment for the returns submitted before the 23 April 2020 deadline.

The amount will be a taxable grant of 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.

The grant will be paid directly into your bank account, in one instalment at the beginning of June 2020.

Individuals cannot apply for this scheme yet.

HMRC will contact those who are eligible for the scheme and invite them to apply online.

Please do not contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

Once it is up and running, access to the scheme will be through the GOV.UK.website

Please be wary of scams and 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.

After you’ve applied

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.

Remember the government are also providing the following additional support for the self-employed:

• Deferral of the payments on account due at the end of July 2020 to 31 January 2021
• grants where your business pays little or no business rates
• a higher amount of Universal Credit
• Business Interruption Loan Scheme

This scheme does not apply if you’re a director of your own company and paid through PAYE where you may be able to get support using the Job Retention Scheme.

If you have any questions or require assistance please contact your dedicated Alliotts partner or contact us.

For more information relating to COVID-19, please view our COVID-19. Information Quick Find page

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