After pressure from MPs and self-employed people around the UK, the UK Government extended its income support measures during the COVID-19 pandemic. This means the government is making grants available for the majority of self-employed people in the UK who have been affected by current events. Here you can uncover details on the self-employed income support scheme and find out if you can make a claim, instantly!
The support for self-employed people resembles that given to those on the PAYE scheme. Self-employed workers will be able to claim 80% of their average monthly profits, capped at £2,500 per month. As this scheme has originally been rolled out to cover three months (but may be extended) the maximum anyone could claim is £7,500.
To work out your monthly profits, HMRC will use your tax returns from 2016-2017, 2017-2018 and 2018-2019. If you do not have all three returns because you started working self-employed later, they will use what they have – but you must have at least one of these tax year returns submitted.
It should be noted that the grant is subject to tax and national insurance contributions, thus it will need to be declared on your 2020-2021 tax return. For advice filling out your self-assessment, speak with our qualified team.
To claim the grant, you must have submitted your tax return for the 2018-2019 tax year and must have traded in the last tax year (2019-2020) and still plan on trading this tax year. Those who have started as self-employed after the 2018-2019 tax year will not be able to claim. Moreover, 2019-2020 tax returns are not used to calculate trading profits, i.e. the amount you can claim.
To qualify to apply you must also meet further criteria:
You can continue to do business and claim the grant.
This is a grey area that has yet to be 100% clarified by HMRC. There are ways you may have been affected by the outbreak, such as being sick and unable to work or closing your operations to self-isolate.
Your income may have reduced because of fewer clients or your supply chain may have been broken and slowed your business down. However, HMRC has not qualified what amount of lost income constitutes being adversely affected.
This may become clearer in the coming days when people begin applying for the grant.
If you are unsure if you can claim, you can find out instantly by using the new HMRC online tool. All you will need is your Unique Taxpayer Reference and National Insurance Number to find out if you can claim.
If you can make a claim, the tool will also tell you the date you will be able to make your claim. Note, this online service will determine your eligibility to claim but not if your claim will be successful.
The online tool will ask you to check the contact details they hold on file to ensure you are made aware when your claimant slot opens. If the tool states that you are ineligible, but you believe this is a mistake, you should call HMRC to discuss.
Claims will begin on the 13th May for some self-employed workers and you will be instantly told whether your claim is successful or not after filling in the online form. This form will be made available on your online personal HMRC account. The same place where you submit your returns.
Because HMRC is ahead of their planned schedule, payments will be deposited into your account as swiftly as six days after a successful claim. This means grants could be paid on the 19th May, much earlier than the previous dates given in June.
Some self-employed workers may become frustrated because they will not be eligible to claim. The most obvious reason is if they only started their self-employed work in the last financial year (2019-2020). New startup self-employed business owners are going to miss out on the grant but may have had their income disrupted in a similar way to long-term self-employed workers.
The UK Government has made other avenues of support available that these people may wish to look into, including income tax deferrals, bounce back loans and grants for small businesses with few or no business rates.
If you want to talk about your situation with a professional UK accountant. Look no further than Yorkshire Accountancy.
We help hundreds of self-employed workers in the UK to get their tax affairs correct and make sure they are not missing out on tax relief and support.
Contact our friendly team at your convenience to learn more about how we can help with the Self-Employed Income Support Scheme!