Covid-19 self-employment income support scheme
There are around five million people across the UK who are self-employed or work on a freelance basis, and many will be relieved to hear that financial support is being offered to help those impacted by coronavirus. Last week the Government announced that help is now at hand for the self-employed individuals who perform an equally as important role as the employed.
There is such a large volume of information to digest in terms of support from the government, so we have broken it down to help you access the most vital information.
The new scheme for self-employed 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 necessary.
Who can apply?
To be entitled to the scheme, individuals must be self-employed or a membership of a partnership and meet the following criteria:
- Have submitted your income tax self-assessment tax return for the tax year 2018-2019 (you now have until April 23 if you haven’t already done this)
- Traded in the tax year 2019-20
- Are trading when you apply, or would be except for the effects of COVID-19 on your business
- Have lost trading/partnership trading profits due to COVID-19
- Intend to continue to trade in the tax year 2020-21
More than half of your income must come from self-employment. Your self-employed trading profits must also be less than £50,000, which 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.
How much will you get?
You will 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 (or the applicable number of years), and use this to calculate a monthly amount.
- It will be up to a maximum of £2,500 per month for 3 months
- The Government will pay the grant directly into your bank account, in one instalment
How do I apply to the self-employment income support scheme?
HMRC will contact you if you in due course if you are eligible for the scheme and incite you to apply online. You will be required to prove your identity, that you are still trading and intent to continue to trade in 2020/21 and that your income has been adversely affected by the virus.
You will access this scheme only through the GOV.UK tax portal. Please note that if you receive any 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 will be a scam.
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.
In such a turbulent time you may still be concerned, you can find more is information on the new coronavirus self-employed income support scheme on the Government website: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#who-can-apply