As you are most likely aware, last week the Government announced that income support will be available to self-employed individuals that have suffered loss of earnings during the pandemic.
HMRC will contact you if you are eligible and invite you to apply online, you cannot apply for this scheme yet, please do not contact HMRC.
If you are self-employed or a member of a partnership you can apply, if you meet the following criteria:
- 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
Your self-employed trading profits must be also less than £50,000 and more than half of your total income.
If you started trading between 2016-19, HMRC will only use those years for which you filed a self-assessment tax return.
If you have not submitted your income tax self-assessment tax return for 2018-19, contact us immediately as you must do this by 23 April 2020.
How much will you get:
You will get a taxable grant which will be 80% of your average profits from the tax years 2016-17, 2017-18 & 2018-19 (where applicable). To calculate this, HMRC will add together the total trading profits for the last 3 tax years then divide by 3. This will however be to a maximum of £2,500 per month for 3 months.
The grant will be paid directly into your bank account in one instalment. It is anticipated that this will be paid in June.
How to apply:
As stated above, you cannot apply for this scheme.
HMRC will contact you if you are eligible and invite you to apply online. Please do not contact HMRC.
After you’ve applied:
Once HMRC has received your claim, they will contact you to tell you how much you will get and payment details.
If you claim tax credits, you’ll need to include the grant in your claim income.
For now, remember that you are eligible to defer your payment on account due on the 31 July 2020 until the 31 January 2021.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
HMRC have also scaled up their Time to Pay offer to all individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.
If you need any further guidance or help, please do not hesitate to contact us.