There was good news from the government for the self employed with the announcement of the Covid-19 Self-employment Income Support Scheme. Here is our 10 point guide to the scheme.
1. 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
2. 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
3. If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
4. HMRC will use data on 2018-19 returns submitted to identify those eligible. 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
5. 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.
6. The scheme will allow you to claim a taxable grant worth 80% of your trading profits (as calculated above) up to a maximum of £2,500 per month for the next 3 months.
7. HMRC will pay the grant directly into your bank account, in one instalment.
8. You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.
9. If you claim tax credits you’ll need to include the grant in your claim as income.
10. If you have not yet submitted your 2019 Tax Return you must do so by 23rd April 2020.