Coping with Covid 19 ~ Support for the Self Employed
Amid growing concern amongst the UK’s large self-employed population about the impact of Covid 19, last week the Government announced details of a support package. In this report we examine the details.
Coronavirus Self-Employment Income Support Scheme
What is it?
This scheme provides financial support to the self-employed sector.
Who is eligible?
All self-employed individuals or members of a partnership where you:
- have submitted your Self-Assessment tax return for 2018/19
- traded in 2019/ 20
- intend to continue to trade in 2020/21 and have reduced profits due to COVID-19.
Your self-employed trading profits must be less than £50,000 and more than half of your income must come from self-employment. The limit of £50,000 is a cliff edge – if your income is above this limit, you will not get any help under this scheme. Likewise, this scheme will not help “off-payroll” workers who trade through their own limited liability company.
If you started trading in the tax year 2016/17 or subsequently, HMRC will only use those years of trading for which you filed a Self-Assessment tax return to calculate the grant. In any event, HMRC will need to have the details filed on your tax return for at least one full year’s trading, as otherwise you will not be able to claim.
If you have not submitted your Self-Assessment tax return for 2018/19, you must do this by 23 April 2020, otherwise you will be excluded from this scheme.
HMRC will use data on 2018/19 tax 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 will you get?
This scheme allows 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.
To work out the average, HMRC will add together the total trading profit for the three tax years 2016/17 to 2018/19 (where applicable) then divide by three (where applicable), and use this to calculate the monthly grant amount.
HMRC will pay the grant directly into your bank account, in one instalment.
How does it work?
HMRC will contact you if they think you are eligible for the scheme and will invite you to apply online. You should therefore wait to hear from HMRC rather than contacting them now.
Comment
It is expected the scheme will benefit around 80% of all self-employed individuals. That will be no consolation to those who fall through the gaps of the scheme such as higher earners or being able to furlough themselves.
