01915484949 info@1stcloudaccountants.co.uk

COVID-19 For the Self Employed

Coronavirus support package for the self employed

This infromation was last updated 3rd May 2020 at 9.00am

This 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.

Who can apply ?

You can apply if you’re a self-employed individual or a member of a partnership and all of the following applies :

 

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19 (or will do before 23 April 2020 if a tax return was already issued.)
  • 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:

 

      1. 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
      2. 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
      3. If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

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 you’ll get

You’ll 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 you 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.

 

Frequently asked questions

How much am I going to get?

The government will pay self-employed people a taxable grant based on their previous monthly earnings over the last three years, worth up to 80% of earnings and capped at £2,500 a month. To be eligible, you must have annual “profits” (self-employed earnings) of less than £50,000 a year, according to HMRC.

The last three years’ tax returns will be the key evidence of your earnings on which an assessment will be made. HMRC will take an average of your last three years’ profits as a self-employed person. If you have been self-employed for just one or two years, then HMRC will rely on those tax returns only.

 

I went self-employed only a few months ago, so don’t have an HMRC tax return to show. Am I covered?

Unfortunately not. If you have not filed a tax return as a self-employed person, you are not covered by this scheme. You must instead apply for universal credit if you lose your income. The chancellor said he had no choice but to use HMRC tax returns as the way to operate the scheme, and that 95% of the self-employed would be covered by it.

 

When will I get the money?

It will not be an immediate payment – The grant will not be awarded until June. But it will then be backdated to March, which suggests the maximum grant could be as high as £7,500.  The chancellor said it was possible the scheme could be up and running before June, but did not want to promise anything earlier.  If you have no money to last until then you will have to claim emergency universal credit.

Information on how to make a universal tax credit clam can be found at https://www.gov.uk/universal-credit/how-to-claim or you can call the helpline on 0800 3285644

HMRC have now launched a specific self-employed helpline for help and advice on 0800 0159559 it also has now deployed additional resources to 0800 024 1222 to cope with the demand.

 

How long will it last for?

The scheme is designed to last three months, but will be reviewed and could be extended.

 

I am a plumber on £65,000 a year with a family and a large mortgage to support, do I get nothing?

It is unlikely you are going to receive anything. The Treasury said anyone with trading profits above £50,000 would not be eligible. Your trading profit is broadly the same as your “taxable profit” that you entered in your tax return. Explaining the cut-off, the chancellor said the average income of those excluded from the scheme was about £200,000 a year.

 

How do I get through to June without any money?

The government had made universal credit more generous and that a family could pick up as much as £1,800 a month in support.  The chancellor said “that the Department for Work and Pensions could make advance payments of the benefit, certainly within days of an application. Councils also had money to help families with council tax bills”

Information on how to make a universal tax credit clam can be found at https://www.gov.uk/universal-credit/how-to-claim or you can call the helpline on 0800 3285644

 

 

Where do I apply?

You don’t apply right now. HM Revenue & Customs will administer the scheme and contact you with a form you will have to fill in and send back.  We now have a seperate page forclients who would like us to make the claim on their behalf.   Please visit the Self Employed Income Support Grant page.

Please call us on 0191 5484949 if you require our estimate urgently.   Please note this will be a chargeable activity and we estimate this will cost around £80 + VAT to do the calculations for you and there is no guarantee it will be accurate as the full details of the scheme have not been released yet.  We advise clients to calculate your own by using the profits from the tax return we supply you every year in the meantime.   These will have also been uploaded to your client document portal.

 

Do I get taxed on the money?

This grant is taxable. So when it comes to your next tax return, the likelihood is that if you have returned to earning a decent sum, then some of the grant will be clawed back through the tax system.  Again the details of this have not been published.

 

How do I prove I’m self-employed?

You will only receive the grant if you have previously put in a tax return to HMRC or you had a tax return issued for the 2018/2019 tax year.    If you haven’t filed, the tax return by 31st January 2020 you now have 4 weeks to file this return.

 

I have been contacted from HMRC to give my details for the claim what should I do ?

This will be a SCAM.   You will access this scheme only through 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.