By Phil Ellerby

Another update, this time for our self employed clients. To help them navigate their finances during the coronavirus pandemic.

An update on the Self Employed Income Scheme with first of all …

Who can make a claim and what is the criteria?

a) The self-employed (including members of LLPs/Partnerships).

b) Must have been trading pre 2019/20 tax year.

c) Must be continuing to trade or would be but for the coronavirus.

d) Must be intending to trade in the 2020/21 tax year.

e) Their trading profits must have been adversely affected by COVID-19. Note that HMRC will be carrying out risk assessment checks in this respect. My thoughts are that if a self-employed person has diversified due to a drop in profits from COVID – 19 is it worth setting them up under a separate trade regarding that diversified income?

What is the claim based on?

f) Trading profits’ and your trading profits must be no more than £50,000 and be more than half of the individual’s ‘total income’ for either:

i) The 2018/19 tax year
ii) The average of the tax years 2016/17, 2017/18 and 2018/19.

How long is the support available for?

The Scheme is, at present, set to run for 3 months (March-May 2020) but may be extended.

What can I claim?

The claim, if eligible, will be 80% of the ‘trading profit’ up to a maximum of £2,500 per month.

Definitions of terms

What are ‘Trading profits’?

‘Trading profit’ will effectively be the total trading income less:

i) Allowable business expenses
ii) Capital allowances
iii) Flat rate expenses
iv) Trading allowance
v) Qualifying care relief (i.e. foster carers)

Note personal allowances will not be deducted when working out the ‘trading profit’.

What is ‘Total income’?

It’s important to remember that the ‘trading profit’ must be more than 50% of the individual’s total income.

Total income is all the individual’s income from:

– Trading profits
– Income from earnings
– Property income
– Dividends
– Savings income
– Pension income
– Miscellaneous income (including social security benefits)

What happens next?

HMRC intend to contact any eligible self-employed by mid May 2020, presumably by letter to avoid scam calls. Do not contact HMRC direct.

Any claim will need to be made using the GOV.UK online service.

HMRC aim to make a one off payment into your bank account by early June 2020.

Whilst waiting for the grant payment you can make a claim for Universal Credit.

Once the claim has been made and HMRC has approved it, they will notify you for your approval and the amount of the grant. It is likely we will be told also.

Other Questions

What happens if I amend an earlier year’s Return?

If a submitted SA Return is amended after 26th March 2020, those changes will be ignored when looking at eligibility and the grant calculation itself.

Will I be taxed on the grant?

Yes. The grant will need to be reflected within the 20/21 self assessment and will be liable to tax and NI.

Can I keep working?

Yes. You can continue to work and receive the grant if all the criteria stated above is met.

If I am employed elsewhere can I still claim?

Yes. If you are employed, they may also benefit from the Job Retention Scheme, through their employer.

We will continue to update you as we know more but as always, if you need to speak to any member of our team about the answers or steps outlined above, please get in touch on 0113 218 9552.