After intense pressure, the Government has announced a significant support package for the self employed.
Under the new Scheme, the government will pay self-employed people (individuals or partners in a partnership) adversely affected by coronavirus a taxable grant worth 80% of their average monthly trading profits over the last 3 years, up to a maximum of £2,500 per month, for at least 3 months.
Full details of the scheme have not yet been released, but we do know the following;
WHO QUALIFIES FOR THE SCHEME
- Individual must have been self employed for the 2018/19 tax year and have submitted a 2018/19 tax return
- Must still be trading, and anticipate trading in the 2020/21 tax year
Furthermore, one of the two following tests must be passed;
- Trading profits in 2018/19 must be £50,000 or less
- Average trading profits for 2016/17, 2017/18 and 2018/19 must be £50,000 or less
- Finally, these profits must constitute more than half the individual’s taxable income
HOW MUCH GRANT COULD YOU RECEIVE
The grant will be calculated as 80% of average profits for the last 3 tax years, and a monthly average paid up to a maximum of £2,500 per month.
Where an individual has not been trading for 3 tax years, then HMRC will only use those years for which tax returns have been filed.
HOW DO INDIVIDUALS ACCESS THE GRANT
It is our understanding that HMRC will contact taxpayers directly over the next few weeks. HMRC should already have the information to determine who is eligible from tax returns already filed with them.
2018/19 TAX RETURN NOT YET SUBMITTED
You will only qualify for the grant if you have submitted your 2018/19 tax return. For those that have not yet done this, the Government have announced a 4 week window to submit the tax return and still qualify for the grant.
CAN INDIVIDUALS STILL TRADE DURING THE GRANT PERIOD
Although full details have not yet been made available, there does not appear to be any barrier for a self employed individual to continue to trade during the period.
However, we need to wait until we see the full details of the scheme before we know what potential barriers are included
WHEN WILL THE GRANT BE PAID
The government has indicated that due to the complexity of setting up the systems to deal with the scheme, payment of the grant is likely to be at the end of June 2020. The indication is that individual will receive a one of lump sum in relation to the 3 month period.
The following link is to the Government announcement of the self employment support scheme. If you have any questions about any of these measures, then please contact us;