Following the Government statement in relation to support for the Self Employed, we provide a brief update to the Scheme as HMRC move toward making contact with you this month.
If you want to know more detail about the Scheme, follow this link:
- Introduction
- Self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month;
- If you only had a few months’ self-employment in the last tax year (2018/9), your earnings will be counted as your total profit for the year;
- In other words, the Government will not pro-rata your earnings based upon the number of months represented by the income earned to arrive at a monthly profit.
- The grant is taxable upon your 20/21 tax return;
- Unlike the employee scheme, the self-employed can continue to work as they receive support;
- When Will The Support Be Available?
- Initially, this grant will be available for three months in one lump-sum payment;
- This is a temporary scheme, but it may be extended;
- The money will arrive directly into people’s banks accounts from HMRC, but not until June.
- How Much Will I Get?
- You’ll get a taxable grant based on your average trading profit over the last 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
- HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then they will divide by 3.
- The grant will be 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.
- Am I Eligible?
- You are eligible for the Scheme if:
- you have filed a tax return for 2018/19
- which indicates that you were self-employed prior to 6 April 2019; and
- your 2018/19 return was filed by 23rd April 2020
- you were trading in the last financial year, still trading now, and plan to continue doing so this year;
- your trading profit was:
- less than £50,000 in 2018-19 (even if prior year earnings average above £50,000 per annum, or
- on average less than £50,000 based upon earnings from 2016-17, 2017-18 and 2018-19.
- at least half your income needs to have come from self-employment as registered on the 2018-19 tax return filed in January
- if this was not the case in 2018/19, then HMRC will take the average of your 2016/17, 2017/18 and 2018/19 tax returns to ascertain eligibility for the Scheme:
- What If I Have Just Started in Self Employment?
- Sadly, the Scheme does not cover people who only became self-employed very recently
- The Chancellor said potential Claimants would have to look to the benefits system for support.
- How Do I Access the Scheme?
- You do not need to contact HMRC, if you are eligible HMRC will contact you directly;
- It is anticipated currently that you will be contacted by mid May to invite your application;
- You will then be invited to claim;
- The online service you’ll use to claim is not available yet;
- The claim will be made using the GOV.UK online service
- When you make your claim, you will need:
- Your Self Assessment Unique Taxpayer Reference (UTR) number, if you do not have this please contact us or HMRC;
- National Insurance number;
- Government Gateway user ID and password
- bank account number and sort code you want the grant paid into (only provide bank account details where a Bacs payment can be accepted)
- What Happens After I Have Claimed?
- Once you’ve submitted your claim, you will be told straight away if your grant is approved.
- HMRC will pay the grant into your bank account within 6 working days.