The Support Package for Self-employed Has Been Delivered
The Chancellor yesterday announced plans for the Self-employment Income Support Scheme to support self employed businesses. Having released details to help employees late last week, it was time for the Chancellor to support the many self employment businesses out there. So lets see how it is all going to work:
The system to help with paying out the grants is yet to be built. We have been warned that grants may not be received by taxpayers until June (although they will be backdated to March) . This is a little while away but waiting for three months to be paid is nothing unusual for the self employed!
Who can apply
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 comes 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
How much you’ll get
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.
They will pay the grant directly into your bank account, in one instalment.
How to apply
You cannot apply for this scheme yet, HMRC will contact you if you are eligible for the scheme and invite you to apply online.
We will of course be able to assist our clients with any application once everything is set up.
Although this grant is welcome to bring parity between self employed and employed (80% of income), the Chancellor did hint at increased taxes for the self employed to help deal with the deficit these grants will cause. That is for another day!
Please do make contact with us if you have any questions.
Everybody @ MATCH Accounting.