Following on from my earlier guidance, we have now received some clarity over what support is available for those workers classed as self-employed.
Self-employed grants
It has now been announced that the self-employed will receive a taxable grant from HMRC which will be an amount of the average monthly profit you’ve made over the last three tax years up to the tax year ended April 2019, up to a maximum of £2,500 per month.
You are eligible for the grant if;
- You’re a self employed individual or member of a partnership
- You’ve submitted a tax return for the tax year 2018/19 (Should have been submitted in Jan 2020)
- You traded in the year from April 2019 – March 2020
- You are currently still trading or would be if not for COVID-19
- You intend to continue to trade in the tax year April 2020 – March 2021
- Have lost trading / partnership profits due to COVID-19
- Your trading PROFIT (not turnover), is less than £50,000 and makes up more than 50% of your total income (i.e. if you are employed by someone as well, your self-employed profit must be more than your employed income)
- If you haven’t been trading as self-employed for the full three tax years but DID have a return for 2018/19 then you will still qualify and they will take your average profit from the years available (whether this is one, two or three years).
- If you’ve not submitted your tax return yet for the 2018/19 tax year you have four weeks from today to do so for you to be eligible for this. The deadline is 23 April 2020.
HMRC will contact you if you are eligible for the scheme.
We expect the scheme to be up and running from the end of June 2020, although there is some speculation it could be as early as the beginning of June. This will be backdated and available currently for a period of three months.
For those of you currently without any income, there doesn’t appear to be any reason you cannot also apply for Universal Credit and still be eligible for this scheme although I will clarify that as soon as I am able.
Who it will not cover;
Unfortunately, the definition of self employed WILL NOT cover those small limited companies where Directors are paid via both salary and dividend. The best option we have with this is to either furlough the Director and claim 80% of the small salary paid or look at claiming Universal Credit.
Universal Credit is currently £317.82 per month if you’re over 25 with an added amount for children. It will depend on your individual circumstances as to which option is best for you. To note this is subject to change based upon the revised UC provided by the government so is likely to increase.
If you are currently taking the maximum NI efficient salary from a company of £719/month this would equate to £575/month claimed back under furlough.
Those who are newly self-employed. If you are recently self employed and haven’t yet submitted a tax return, unfortunately the grant will not be available to you. As discussed in the previous update, we will have to look at other options, such as Universal Credit in order to get you some income.
Other information
To note that with this grant, if you have work, you can continue to work and still claim this grant.
This will be taxable, so any grant money received will need to be input on your 2020/21 self-assessment return and paid by 31 January 2022.
If you claim tax credits, you will need to declare the grant as income on your claim.
You will NOT be able to include your 2019/20 tax return earnings in the calculation for the grant.
Further updates
Since the previous update, we have also received notice that Companies House are allowing companies to defer accounts filing deadlines for a period of three months. You DO have to apply to Companies House for this, we will help you do that if you need to.
If you are late filing your 2018/19 self-assessment return, please let us know and we will help
you meet the new deadline for consideration of this grant.
Also where you are a CIS contractor due for a rebate, we appreciate you will want to get this filed as quickly as possible, we are expecting HMRC to be efficient in processing these rebates so please let us know if we can help with that.
We appreciate that these are very difficult times for all of us, we’d be happy to discuss any questions you may have on the above, or anything else that we can help you with.
I hope you’re all doing as well as you can be.
Stay safe people.
Laura