As you may be aware the Chancellor announced yesterday details of the ‘Self-Employed Income Support Scheme’. We have summarised below the key points of the scheme:
You don’t need to do anything right now
If you are eligible for the scheme will be contacted directly by HMRC and invited to complete a simple form to make use of the scheme. At this moment, there is little information on what this form will look like (other than it will be online).
The scheme will provide taxable grants to the self-employed
Self-employed individuals will receive a taxable cash grant worth 80% of their average monthly trading profits, as reported through self-assessment, over the last three years. The Government claims this will cover 95% of people who primarily receive their income through self-employment. As with the Coronavirus Job Retention Scheme, the payments will be capped at £2,500 per month.
Not all self-employed people will be eligible
The Scheme will only be applicable to those who reported trading profits of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from the last three years (2016-17, 2017-18 and 2018-19). Additionally, the Scheme is only open to those who earned more than half their income from self-employment.
The grants won’t be available until June
Grants made under the scheme will be paid in one lump sum in June. Unlike the Job Retention Scheme eligible individuals can continue to trade and do not need to stop work to receive the grant. Those unable to trade and are struggling financially are advised to apply for Universal Credit in the interim, and to approach their mortgage provider for a three-month mortgage holiday.
What about those operating from companies?
Those who operate through a limited company are not eligible for the scheme. Though it has been confirmed that such individuals are eligible for the Coronavirus Job Retention Scheme if they operate a PAYE scheme.
Overdue Tax Returns
The Chancellor announced that anyone with an overdue Self-Assessment Tax Return for 2018/19 will have a 4 week window in which to submit that tax return to ensure they qualify for the scheme. Therefore if you need your 2018/19 Self-Assessment completed we suggest you contact us as soon as possible.
As with all the information related to Covid-19 guidance it is extremely fast moving and the source information is limited, we will continue to contact you as and when we know more.