Yesterday, after many days of questioning, the Chancellor announced the government’s intention to provide further support for those who are self-employed and in Partnerships in the form of a taxable cash grant. The full guidance is noted below but the summary position is as follows:
- You do not need to contact HMRC now. HMRC will contact and invite those that are eligible to apply. Applications will need to be made online when the invitations have been issued by HMRC.
- If you have suffered a loss in income, a taxable grant will be paid to the self-employed or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
- Initially, this will be available for three months in one lump-sum payment, and will start to be paid from the beginning of June
- More than 50% of your income needs to come from self-employment
- The scheme will be open to those with a trading profit of:
- less than £50,000 in 2018-19
- or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19
- Those who are recently self-employed, having set up since April 2019, will not receive any help under this scheme. This is because they will not have filed a tax return and therefore HM Revenue and Customs (HMRC) will not know of their self-employed status.
Update: In August, applications will open for a “second and final” payment, which will cover 70% of profits, up to a cap of £2,190 a month for another three months, so £6,570 in total.
This assistance is on top of the six month delay already announced for the second instalment of the 2020/21 second payment on account due on 31 July 2020, which can now be paid as a balancing payment on 31 January 2021
The scheme allows individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the 3 months from March to May 2020. This may be extended if needed.
The cash grant will be in the form of a single lump sum to cover the three months from March to May 2020. It will be paid in June 2020 to those that are eligible directly into their bank account. Please remember that this is a taxable grant and will need to be declared on your next Self-Assessment.
The self-employed including members of Partnerships will be eligible if their trading profits for the 18/19 year were less than £50,000 and more than 50% of their income comes from self-employment.
Alternatively, they will be eligible if their average trading profits for the tax years 16/17, 17/18 and 18/19 were less than £50,000 and more than 50% of their income comes from self-employment. For those that started trading between 2016-19 HMRC will only use those years for which a Self-Assessment tax return has been filed.
The scheme will be open to those that have submitted an income tax self-assessment tax return for the year to 5 April 2019 (the 18/19 tax year). For those that have yet to file their 18/19 tax return, it gives you an opportunity to get this filed by 23 April 2020 in order to eligible.
Additional eligibility criteria include the requirement that the individual must have lost trading profits due to Covid-19 and they must have traded in 2019/2020, intend to trade in 2020/2021 and are trading at the point of application or would have been except for Covid-19.
Individuals that claim Tax Credits would need to include the grant as part of their income.
H.M. Revenue & Customs will contact and invite those that are eligible to apply. Once invited, applications will need to be made online via a new dedicated online portal for the scheme.
We will update this page as and when further guidance is issued. Also, please remember that H.M. Revenue & Customs will never send you a text or call you to ask for bank details so if you get that, ignore it!
Update: This webinar gives an overview of the Self-Employment Income Support Scheme
If you require any further assistance regarding your Self-Assessment, completing your (late) 2018/19 Return or understanding your figures, please contact Aldrich.