The Government has unveiled its scheme to help self employed workers who have lost income due to coronavirus.
This scheme will allow self employed workers or a member of a partnership to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next three months. This may be extended if needed.
Briony McDermott, employment solicitor at Wake Smith Solicitors looks at the details of the scheme.
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 come 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 have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
- HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
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 and HMRC will pay the grant directly into your bank account, in one instalment.
Briony added: “You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Don’t contact HMRC now as it will only delay the scheme.”
This scheme can only be accessed through GOV.UK. Watch out for scammers texting and emailing claiming to be from HMRC. This is not from HMRC.
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.
For further information on other initiatives visit www.gov.uk.
For any employment queries contact Briony McDermott at [email protected]
