Coronavirus Update -
31st March 2020 2nd Update
The government announced measures to assist the self- employed. That’s sole traders and partnerships.
Although I understand that funds, will not actually reach individuals until June!
The text of the announcement is below. My comments in red.
Website https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-self-employed-through-the-self-employment-income-support-scheme
Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme
Use this scheme if you're self-employed or a member of a partnership and have lost income due to coronavirus.
Published 26 March 2020
From: HM Revenue & Customs
Contents
This scheme 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 needed.
Who can apply
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
• This is all our clients, who were self employed in 2018/2019 . If your business started after 6th April 2019 , this indicates that this scheme, will not provide assistance
• traded in the tax year 2019-20
• You must have traded at some time within the current tax year. This applies to all our clients. Businesses that traded in 18/19, but ceased trading before 5th April 2019 - this indicates that this scheme, will not provide assistance
• are trading when you apply, or would be except for COVID-19
• This applies to most businesses.
• intend to continue to trade in the tax year 2020-21
• Intention is exactly what it says. I take this to mean at the time you apply for the scheme, even if you do not end up actually trading.
• have lost trading/partnership trading profits due to COVID-19
• This will apply to the vast majority of businesses. But some limited sectors have seen an increase in trade. Bakery businesses for example, are experiencing high demand
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:
We will look at this for clients. There are 2 conditions here, one covers just 18/19, and the other cover 3 tax years. The vast bulk of self-employed individuals, will pass the criteria, but not all.
• 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. This covers businesses that started-up in the 3 years in question.
If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. As previous, if you were a client in 18/19, you will have submitted a return. We have no non-filers.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
How much you’ll get
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
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.
One thing not mentioned here, is what happens if a business made a taxable loss. This will reduce the average figure, But will it be taken into account?
It will be up to a maximum of £2,500 per month for 3 months.
We’ll pay the grant directly into your bank account, in one instalment. I understand this will be in June.
How to apply
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
You will access this scheme only through GOV.UK. If someone 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 is a scam.
After you’ve applied
Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
