Self-Employment Benefits

Self-Employment Income Support Scheme

The Self-Employment Income Support Scheme is designed to provide support to the self-employed who have been negatively impacted by Coronavirus.

Under the first set of measures, the Government announced that they will pay a grant to self-employed individuals to cover 80 per cent of their average monthly profits for the past three years, paid out in a single instalment covering the months March, April and May and capped at a maximum of £7,500 in total. Payments started to be paid in May.

On 29 May, the Government announced an extension to the scheme to cover income for June, July and August, however the maximum payment has been reduced from the first grant. This final grant will now cover 70% of earnings over a three-month period, up to a maximum of £6,570 in total.

Applications for a second payment will open in August and successful claims will be paid out in a single instalment covering three months’ worth of profits and will be paid within six working days.

Self-employed individuals will be able to continue work, start a new trade or take on other employment and still receive the grant.

The grant is subject to Income Tax and National Insurance.

Who is eligible?

To be eligible for the scheme you must meet ALL of the following conditions:

  • Be self-employed or a member of a partnership (note that Directors of Limited Companies are not classed as self-employed);
  • Have lost trading/partnership trading profits due to COVID-19;
  • Have filed a tax return for 2018-19 as self-employed or as a member of a trading partnership. The 18-19 tax return must have been filed by 23 April 2020
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020/21;
  • Have trading profits of less than £50,000 (note that rental profits are not classed as trading profits) and have more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
  • Your trading profits and total income in 2018/19
  • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

Check your eligibility

HMRC have released an online eligibility tool to check your eligibility for the scheme using your UTR and National Insurance number. You don’t need to enter any income details to use the online eligibility tool, however, you will need your National Insurance number and your self-assessment UTR to hand. The tool can be accessed here.

The online tool will give taxpayers a date when they can access the portal to submit their claim.

Where the online eligibility tool gives a “not eligible” result there is an option to compete an online form to request a review of eligibility. If the taxpayer is not satisfied with the outcome of a review they, or their agent, should follow HMRC’s complaints process. There is no right to make a formal appeal – decisions on the award of a grant are not decisions on a tax matter that can be appealed to the tax tribunals.

How to apply

The online claim portal can be found here and you’ll need the following to be able to make the claim;

  • Government Gateway user ID and password (if you don’t have one you can create one during the eligibility check above)
  • Self-assessment UTR
  • National Insurance number
  • Bank account number and sort code (to receive the payment)

You’ll also need to confirm to HMRC that your business has been adversely affected by Coronavirus. HMRC has given the following as examples of how you could be adversely affected by coronavirus:

You’re unable to work because you:

  • are shielding
  • are self-isolating
  • are on sick leave because of coronavirus
  • have caring responsibilities because of coronavirus
  • you’ve had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come into work

You don’t need to provide any details of your income. The calculations are undertaken by HMRC in the background based on the tax returns submitted.

Once approved, HMRC will make the payments directly to claimants’ bank accounts within 6 working days.

We cannot make claims on behalf of clients. HMRC have excluded agents from making claims for clients, citing limited time available to develop the system and the one-off nature of the scheme as reasons.

Self-assessment payment on account deferral

On Friday 20 March, it was announced that any current self-assessment payments due for payment on 31 July 2020 are now deferred until 31 January 2021.

HMRC have advised that all taxpayers who normally pay their self-assessment by direct debit should cancel the direct debit with their bank if they would like to take advantage of the deferral. Taxpayers should do so in sufficient time so that HMRC do not attempt to automatically collect the tax in July. No penalties or interest will be charged during the deferral period.

VAT Payments

It was also announced on 20 March that the next quarter of all VAT payments are being deferred, with no VAT payable until the end of June, and those payments can be deferred until the end of the financial year. All VAT-registered self-employed trades or businesses are eligible.

The deferral will apply between 20 March 2020 and 30 June 2020. Businesses will not be required to pay VAT liabilities to HMRC during this period. Any VAT liabilities that should have been paid during this period will need to be paid to HMRC by April 2021.

HMRC have advised that all businesses who normally pay their VAT by direct debit should cancel the direct debit with their bank if they would like to take advantage of the VAT deferral. Businesses should do so in sufficient time so that HMRC does not attempt to automatically collect the VAT on receipt of the VAT return.

VAT refunds and reclaims will be processed as normal.

What next?

If you’re self-employed and are struggling to meet your current liabilities, simply get in touch. This is one of a range of measures which have been announced to support self-employed individuals and we can help guide you through what is available for your particular circumstances.

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