There was very welcome news with yesterday’s statement from the Chancellor regarding help for the Self-Employed.
Coronavirus Self-employment Income Support Scheme
The scheme is open to people who are self-employed or a member of a partnership and have lost income due to coronavirus. To access the scheme, you will need to:
- 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.
The three-year average will flatten out any peaks or troughs meaning there will be a clearer picture of your profits. For example, if you were to only look at 2018/19 and your profits were just over £50,000 but previous years were significantly below that you would not have been eligible. With the three-year average you would be eligible.
HMRC have extended the deadline for submitting your Income Tax Self-Assessment tax return for 2018/19 to the 23rd April 2020 if you have not already done so.
You will get a taxable grant which will be 80% of the average profits from the last 3 tax years (where applicable). This will be up to a maximum of £2,500 per month for 3 months which will be paid into your bank account in one instalment. This should be paid by June at the latest.
The scheme may be extended if required.
You cannot apply for the grant -HMRC will contact you if you are eligible and will invite you to apply online.
If you have started trading in this tax year (2019/20) you will not be eligible for this scheme. You may be eligible for help through Universal Credit where advance payments are available once you have a claim.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
Other measures
The following bullet points are a brief synopsis of the current government measures. I have given more detail in earlier blogs here and here.
- Coronavirus Business Interruption Loan Scheme.
- Deferral of VAT payments. For VAT the deferral will apply from 20th March to 30th June 2020. Businesses will have until 5th April 2021 to pay this back. All UK companies are eligible.
- For Income Tax Self-Assessment, payments due on 31st July 2020 will be deferred until 31st January 2021. This is automatic -no application is required.
- Those businesses and self-employed that are in financial distress with outstanding tax liabilities may be eligible for support through the Time To Pay service. If Coronavirus might make you miss a payment call the helpline 0800 0159 559.
- Business rates holiday.
- Retail & Hospitality Grant Scheme.
- Small Business Grant Scheme (for businesses that pay little or no business rates).
- Insurance. Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met. You should check your insurance policy for specifics.
- Universal Credit. Increased amounts and removal of the minimum income floor.
- Renters. An increase in housing benefit and Universal Credit means that the Local Housing Allowance will cover at least 30% of market rents in your area.