On the 26th March 2020, the chancellor announced that the UK government would be setting up a scheme to help the self-employed who have been affected by the coronavirus outbreak.
This scheme is due to go live on 13th May 2020.
The scheme will allow individuals to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering a 3 month period, capped at a maximum grant of £7,500 (£2,500 per month). HMRC may extend this claim period at a later date.
Self-employed individuals are eligible to work and claim for the self-employed income support scheme.
Tax agents or advisors cannot make the claim on behalf of the tax payer. The individual must make the claim themselves online. If you are unable to make the claim online, HMRC will setup an alternative way to claim.
Eligibility:
You can claim if you are a self-employed individual or a member of a partnership and:
- You traded in the 2018-2019 tax year and submitted your Self-Assessment tax return on or before 23rd April 2020.
- You traded in the 2019-2020 tax year.
- You intend to continue to trade in the 2020-2021 tax year.
- You carry on a trade which has been adversely affected by coronavirus.
To work out your eligibility, HMRC will first look at your 2018-2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 AND at least equal to your non-trading income.
If you are not eligible based on your 2018-2019 Self-Assessment tax return, then HMRC will look at your Self-Assessment tax returns for 2016-2017, 2017-2018 and 2018-2019 and take an average of your trading profits.
You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.
How HMRC will work out your eligibility:
HMRC will assess if you are eligible for the grant based on your trading profits AND your non-trading income on your Self-Assessment tax returns.
Trading Profits:
These include profits from your self-employment or partnership. This is after deducting capital allowances therefore your taxable profits.
HMRC will not deduct from your profits any losses brought forward from previous tax years or your personal allowance.
Non-trading Income:
HMRC will work out your non-trading income by adding together the following:
- Income from earnings
- Property Income
- Dividends
- Savings Income (interest)
- Pension Income
- Overseas Income
- Miscellaneous Income
HMRC have developed a useful online tool to find out if you’re eligible to make the claim. Please click here to access this online tool.
To use the tool, you will need the following:
- Your Self-Assessment Unique Taxpayer Reference (UTR)
- Your National Insurance number
These can both be found in the bottom left hand corner of your tax calculation we send you yearly or on any correspondence received from HMRC.
How to make the claim:
The online service will be available from 13th May 2020.
In order to make the claim, you will need the following:
- Self-Assessment Unique Taxpayer Reference (UTR).
- National Insurance Number.
- Government Gateway user ID and Password. If you do not have a user ID, you can create one when you check your eligibility online.
- Bank Account number and sort code so HMRC can pay the grant into your account.
If you haven’t already set up a government gateway, then we suggest setting one up and linking your self-assessment to it prior to 13th May 2020 in order for you to be able to make the claim if you are eligible.
Once you have successfully submitted your claim, it will be confirmed straight away and HMRC will aim to pay the grant into your bank account within 6 working days.
You must keep a copy of all records including the amount claimed, the claim reference and evidence that your business has been adversely affected by coronavirus.
For more information on the Self-employment income support scheme, please click here to visit HMRC’s website which has lots of useful information and examples.