SUPPORT FOR THE SELF EMPLOYED
For those who qualify for this, this will be great news but unfortunately there will be many of you who it will not help in the way we’d hoped. If you are a Director of a Limited company, please check the bottom of this article in relation to the Job Retention Scheme as this may be a way you can claim some support.
Self-Employment Income Support Scheme
Who Can Claim It:
The self-employed. But here is the thing, the government are using HMRC’s definition of this. Self-employed means either:
- You are registered with HMRC as a sole trader and you enter details of your business on the self-employment pages of your Personal Tax Return, or;
- Individuals (i.e. partners) in a Partnership. For these purposes, we understand they are referring to partnerships that have been formally registered with HMRC as such, i.e. have their own Partnership Unique Taxpayer References and for which Partnership Tax Returns are filed each year. Working alongside someone ‘in partnership’ is unlikely to qualify you for this relief unless everything has been formally registered.
If you run your own Limited Company you will more often than not be a shareholder and director – this does not make you self-employed in the eyes of this scheme.
Qualifying Criteria
If you’re in one of the categories above you may qualify if you meet all of the criteria below: –
- You have submitted your 2018-19 tax return
- You traded through your sole trader (self-employed) or partnership business in the 2019-20 tax year
- You are trading when you apply (i.e. now) or would be except for COVID-19
- You intend to continue to trade in the 2020-21 tax year
- You have lost trading/partnership trading profits due to COVID-19
There are two final qualifying criteria:
- You must have trading profits of less than £50,000 AND
- These profits must make up more than HALF your total taxable income.
BOTH of these criteria must be met, but HMRC will consider two different periods and you’ll qualify if both are met for EITHER assessment period: – the 2018-19 tax year – the AVERAGE of your figures across the 2016-17, 2017-18 and 2018-19 tax years.
If you need help working this out and we do your Self-Assessment, talk to us and we can review your tax returns/SA302s.
If you started your self-employment/partnership after 06/04/16 but before 05/04/19 then HMRC will assess your eligibility and support amount based on the information you have i.e. if you only have 1 year’s accounts, that is what they will use.
What Will You Get?
Support is in the form of a taxable grant. HMRC will add together the total trading profit for your business for the tax years 2016-17, 2017-18 and 2018-19 and divide it by 36 (adjusted if you don’t have 3 years trading). You’ll be entitled to 80% of that monthly profit figure; up to a cap of £2,500. We do not yet know whether the profit figure used will be before Capital Allowances deductions, but it would make sense if it is.
The grant is for 3 months and will be paid directly to your bank account in one payment.
When?
Sometime in June is the current guidance.
How do I apply?
HMRC will be using their records to qualify you and you will hear from them in due course.
Company Directors who take a mixture of Dividends and PAYE
Please see our guidance on the Coronavirus Job Retention Scheme. Sadly, you are not accounted for in this self-employed scheme.