Well there’s a turn up for the books, I hadn’t expected that! I guess that shows the seriousness of the situation for all of us who run our own businesses.
The self-employed are to receive a similar grant to that offered to employers for employees. 80% of your profits up to £2500 per month for at least 3 months, bringing parity to the Coronavirus Job Retention Scheme announced for employees.
The new scheme is called the Self-Employed Income Support Scheme. To be eligible your trading profits must be less than £50,000 and more than half your income must come from self-employment.
To minimise fraud, only those already in self-employment and who meet the above criteria will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply. Those who have recently started self-employment are excluded from the scheme.
The Income Support Scheme will cover the 3 months March, April and May 2020. Grants will be paid in a single lump sum covering all 3 months. The payments will start to be paid at the beginning of June.
Before grant payments are made, the self-employed will still be able to access other available government support for those affected by Coronavirus including universal credit and business continuity loans where they have a business bank account.
The ceiling of less than £50,000 trading profits applies to profits in 2018/2019, or an average trading profit of less than £50,000 for the last 3 years (2016/2017, 2017/2018, 2018/2019). The grant will be a taxable cash grant paid directly into your bank account.
Those owners / directors of their own limited companies who pay themselves a salary and dividends will not be covered by the scheme, however their salary will be covered by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
Words of caution, you will need to be adversely affected, that is have reduced trading profits. There is no indication of how badly affected you would need to be, so in theory even losing a small job or amount of pay could qualify, however, HMRC will be able to verify whether losses are genuine or sufficient when the tax returns are filed for 2020/2021. Also the question of the self-employed paying additional National Insurance Contributions in the future has been raised once again, so it may be a matter of quid pro quo. And finally the claims cannot be submitted yet as the facility has not been set up and isn’t expected to be ready until June, so we need to get through the next 3 months.
Synergy Accounting can offer help with the calculations for the completion of the applications for the grant, and where possible will submit the applications on your behalf. If we are unable to submit the applications on your behalf we aim to provide you with the information you need to do it yourself.
More information can be found here Coronavirus Self-Employed Income Support Scheme
Stay safe, stay indoors and keep smiling 😊
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About the Author:
Koreen is a Member in Practice of The Association of Accounting Technicians, which means that she is both licensed and regulated by the AAT. However Koreen is also a Fellow Member which is an acknowledgement by the AAT of her senior status in terms of knowledge and experience.