The government has unveiled the Coronavirus Self-Employment Income Support scheme to help self-employed individuals who have suffered financially due to Coronavirus.
This scheme will be in the form of a grant and self-employed individuals will be entitled to claim 80% of their average monthly profits earned over the last three years for up to £2,500 a month. This will be paid in a single lump sum directly into the individual’s bank account, covering 3 months’ worth of profits, and capped at £7,500 in total. Those eligible for this scheme will have this grant paid into their bank account within six working days of completing a claim. However, you must make your claim on or before the 13 July 2020.
This scheme has been extended. Self-employed individuals will be able to make a claim for a second and final grant in August 2020. This final payment will be worth 70% of their average monthly trading profits capped at £6,570. An individual does not need to have claimed the first grant to receive the second grant. However, the online service for the second and final grant is not available yet.
To work out the average, HMRC will add together the total trading profits for the last 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
The grants will be taxable and will need to be declared on tax returns by January 2022.
To be eligible for this scheme, a self-employed individual will need to:
1. Show that at least half of their income comes from self-employment as registered on the 2018-19 tax return filed in January. Click here if you missed this deadline.
2. Show that you have traded in the tax year 2019-20.
3. Show that you are trading when you apply, or would be if Coronavirus was not affecting your business.
4. Show that you intend to continue to trade in the tax year 2020-21.
5. Show that you have lost trading profits due to Coronavirus.
6. Show that you earned under £50,000 in trading profits in 2018-19.
Self-employed individuals who will be eligible for this scheme will still be allowed to continue work as they receive governmental support.
This scheme does not cover:
1. Company owners who pay themselves a dividend. Click here if this applies to you.
2. People who only became self-employed very recently (in the last year). These individuals will need to look to the benefits system for support.
Self-employed individuals who are eligible for this scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form. The lump sum will then be being paid directly into the individual’s bank account. You can find the online form here.
It is important that you keep a copy of all records of your claim which should indicate: the amount claimed and the claim reference number.
Click here if you are wondering if you can be supported through the VAT and Income Tax payments.
Click here to find out about additional help you can get from the government.