Last updated : 27th March 2020.
On 26 March 2020, the Chancellor, Rishi Sunak announced measures to support self-employed individuals and members of partnerships whose income has been negatively impacted by COVID-19.
The key points Self-Employed Income Support Scheme
- The government to set up a new Self-Employed Income Support Scheme to support self-employed individuals and members of partnerships whose income has been negatively impacted by COVID-19;
- The taxable grant will pay 80% of average profits, not revenue, over the last 3 financial years, capped at £2,500 per month and will be available for at least the next 3 months;
- The total grant will be paid directly by bank transfer in June 2020, in one instalment;
- Unlike the governments COVID-19 Coronavirus Job Retention Scheme, it was confirmed that self-employed individuals can claim the grant and continue to do business;
- The Chancellor confirmed HMRC will automatically contact self-employed individuals who have filed a tax return. There is no need to apply but there will be a simple online form to complete;
- The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. This is calculated as follows:-
- HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount;
- Anyone with trading profits over £50,000 will not be eligible;
- He also confirmed anyone that missed the filing deadline in January 2020 have until 23 April 2020 to file tax return but will be “risk assessed”. Contact us for further details;
- Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary only by the Coronavirus Job Retention Scheme if they are operating PAYE schemes and were on the payroll in February 2020;
- To minimise fraud, the scheme will only be available to those who receive more than half of their income from self-employment;
- The Government and HMRC have stated several times that the grant is only available for those that have been negatively impacted by COVID-19 and presume this will be questioned on the “simple online form” mentioned above;
- The scheme also applies to members of partnerships;
- It was confirmed those that very recently become self employed i.e. in the 2019/20 tax year would not be eligible but will be able to access Universal Credit;
- It is confirmed the grants will be taxable, and we understand will need to be declared on the 2020/21 tax return due in January 2022;
- Moreover, it has previously been confirmed that the upcoming self assessment payments due on 31 July 2020 will be deferred to January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period;
Further information to be released shortly…
We will make further announcements on our website and social media.
For further information, please contact your usual contact or Relationship Manager, or telephone on 01923 332586.
