We know that a lot of our self-employed customers will have been waiting intently for last week’s update from the Chancellor, which set out what financial support is available during the coronavirus pandemic.
It’s an uncertain time for everyone, and with so much advice coming at us on a daily and sometimes hourly basis, we want to lend a hand and help you make sense of it all. So, we’ve been speaking to our friends from Exchequer Accountancy about what this latest support means for you if you’re self-employed.
What support is available?
The current Government scheme for self-employed workers is offering a grant of up to 80% of an individual’s self-employed profits, initially for three months, although this will be reviewed. The amount available is dependent on an average of your declared profits on your self-assessment tax return from the past three financial years (since 2018/2019).
Your trading profits cannot exceed £50K per annum, meaning the maximum payout per month is £2.5k.
Who is eligible for the scheme?
The Government scheme is available for all self-employed workers (sole traders or partnerships) across the country. However, there are a few restrictions:
- It does not cover those who are trading as a limited company or operating as a PSC – even if you’re a one-man band. In this case, you may be eligible for a “furlough” payment through the Government Job Retention Scheme – see below.
- You need to have been trading during the 18/19 tax year between the 6th April 2018 and 5th April 2019. You also need to be trading in the 19/20 tax year and for that trade to have been affected by coronavirus.
- At least half your income on your 18/19 tax return needs to come from your own self-employed trade. For example, dividend or pension income cannot be included.
What do I need to do to get the grant?
This is the good news – absolutely nothing! If you are eligible for support, HMRC will contact you directly and the full payment, initially covering three months, will be deposited into your account by the end of June.
The only thing HMRC require you to do is check that you’ve submitted your 18/19 tax return before the deadline, which was the end of January 2020. If you haven’t got around to this yet there’s still time. You have until the 23rd April to make sure this is done!
Are there any deadlines?
As this is an automatic scheme, there are no deadlines to receive the payout.
What if I’m a small trading company or PSC?
If you are a small business that is being impacted by COVID-19 but aren’t eligible for the Government’s self-employed scheme, there are other options available to you. For example, you can apply for Universal Credit while your business is unable to operate.
Alternatively, you can join the Job Retention Scheme as offered to all businesses. Even if you’re the only employee in your company, you are still able to furlough yourself and receive 80% of your annual wage – up to £2,500 a month. However, this will only be based on your annual PAYE income and not from any dividends that you may receive. It’s important to note that you are also unable to work for as long as you are receiving this support, which must be for a minimum of three weeks. We recommend that you check your forecasted work and make sure you have no upcoming jobs for that period before joining the scheme by contacting HMRC.
If you have a question that we haven’t covered, drop us a message @Jewson on Facebook or Twitter and we’ll support you the best we can.
For more information on the support available, visit the Government website here.
