Help for self Employed update 26/3/20

A new scheme known as the SELF EMPLOYMENT INCOME SUPPORT SCHEME was introduced on 26th March.

Help is at hand for most self employed people, full details of what has been published below. Limited company "1 man bands" unfortunately do not count as self employed and will only be able to claim 80% of salary (pre March 2020, so no backdating) under the CV Job retention scheme as a furloughed employee.

I understand that the self employed will still be able to work to qualify for the money, but they will need to have suffered loss as a result of the CV. There is no guidance as to how much of a loss they will have had to suffer. More will follow I am sure. But you ARE allowed to carry on working
Broadly the money, payable in June at the earliest will come as a lump sum and will be based on average profits (after expenses) of the 3 years ending 5 April 2019. It seems likely that this will be the taxable profit (i.e if you bought a van say in one of the years, that would could reduce one years profit considerably). I am guessing here, but that seems to be how the calculation will be done, as HMRC have those figures to hand.

The calculation: The average profit for those 3 years x 80% and turned into a monthly figure, max £2,500 per month for at least 3 months.

Maximum average income £50,000 to qualify. Looks like if your average income is £50,001 you miss out completely.

Your self employed income needs to be greater than 50% of your total income to qualify, I presume on an average basis. So people with self employment and employment in those years could struggle.

Anyone who started self employment since 6 April 2019 having given up a PAYE job seem to get NOTHING from either scheme and will have to either sign on to Universal Credit and or claim under the small business interruption loans.
There is nothing to do at this stage, HMRC will contact you (or me as your agent possibly), probably not until close to June.

Full HMRC here

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 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

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:

• 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 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not 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 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 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.

We’ll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

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

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.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we 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.

Other help you can get

The government is also providing the following additional help for the self-employed:

• deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
• grants for businesses that pay little or no business rates
• increased amounts of Universal Credit
• Business Interruption Loan Scheme

If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.