Government Support for Self Employed / Sole Traders & Partnerships
Following the Chancellor’s announcement on Thursday evening please see below the updated information re the grant that will be made available (definition: money given to someone, i.e. not a loan to be re-paid) allowed to the self employed:
This scheme will allow sole traders or members of partnerships to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Who can apply
You can apply if you’re a self-employed individual or a member of a partnership and you:
– have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
– traded in the tax year 2019-20
– are trading when you apply, or would be except for COVID-19
– intend to continue to trade in the tax year 2020-21
– have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income from self-employment. This is determined by at least one of the following conditions being true:
– having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
– having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
If you haven’t submitted last year’s tax return that now becomes urgent and needs to be done before 23rd April!
How much you’ll get
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
– 2016 to 2017
– 2017 to 2018
– 2018 to 2019
To work out the average 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.
It will be up to a maximum of £2,500 per month for 3 months.
They’ll pay the grant directly into your bank account, in one instalment.
How to apply
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
After you’ve applied
Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
Of note is that this scheme will be paid in a one off lump sum, and that is likely to be in June once they have collected all the claims information and bank details. If you envisage any hardship or financial difficulty between now and then it may be prudent to contact mortgage and finance companies now, to discuss payment holidays until government payments are received.
Our thanks to Ali Norrish from the WebbPaton team. For more information or if you need help preparing last year’s tax return please call Ali on 07814 578034 or email email@example.com