FOR THE SELF EMPLOYED
The 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. It appears that the self-employed are still eligible for this scheme even if they are still working (unlike the employee scheme).
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. When the scheme becomes available Aston Hughes & Co will be happy to assist in the application process if HMRC permit.
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 (late filers have until 23 April 2020 to file this return to be eligible).
- 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 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.
- 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.
- 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.
You’ll get a taxable grant which will be 80% of the average profits (up to a maximum of £2,500 per month) from the tax years (where applicable):
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
- Unfortunately, if you only traded for part of the year, HMRC will use this as the full year’s results it will not be time apportioned.
The initial grant will be paid directly into your bank account, in one instalment.
If your self employment business has been set up since April 2019, this support is not available.
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.
If you claim tax credits you’ll need to include the grant in your claim as income.
Those who trade through a limited company and pay themselves a salary and dividends are not covered but may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes, there is no provision for dividends.
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. Unfortunately, if you only traded for part of the year, HMRC will use this as the full year’s results it will not be time apportioned. Grants are expected to start to be paid by the beginning of June 2020. In the interim the self-employed will still be eligible for other government support, including more generous universal credit and business continuity loans.
Freelancers, agency workers, and persons operating under umbrella companies are not eligible for this scheme but may be eligible under the job retention scheme (furloughed workers).
Deferral of second payment on account for 2019/20
The deferral for income tax self assessment applies to the second payment on account for 2019/20 due on 31 July 2020 which is deferred until 31 January 2021. This is an automatic offer and no application is required. Self assessment returns should still be filed by their due date. Eligibility is limited to the self-employed ie, the deferral does not apply to those that are in self assessment but are not self-employed.
Any taxpayer that qualifies for the deferral and has already set up a direct debit mandate for the payment on account due on 31 July 2020 should consider cancelling it. It may be advantageous to file the 2019/20 return as soon as possible after 5 April 2020 because his might facilitate planning for the tax payment due in January 2021 and perhaps crystallise any refund due, No penalties or interest for late payment will be charged in the deferral period.
Universal credit may be available which includes a housing element for rented property. This is currently being improved.- increased by £1000 per year. The minimum income floor has been eliminated , however savings are.
Ownership of a second property is counted as savings. There are various conditions for receipt of universal credit. Universal credit is tax free. You can apply for the self employed grant and universal credit.