Financial Support for the Self-Employed
Through the Self-employed Income Support Scheme, government will provide a taxable grant to cover up to £2,500 of your average monthly trade profits.
Eligibility:
You are self-employed or a member of a partnership and have:
- Submitted your 2018-19 self-assessment tax return
- Traded in the 2019-20 tax year
- Intend to continue trading in the 2020-21 tax year
- Trading at the time of application or you would be if it wasn’t for the coronavirus
- Suffered financially due the the coronavirus
- Trading profits of £50,000 or less in 2018-19 and count towards over half of your total taxable income
- Average trading profits of £50,000 or less over 2016-17, 2017-18 & 2018-19. Over the same three year period, these profits must be over half of your total taxable income
- If you have not yet submitted your 2018-19 tax return, please contact us immediately as you have until the 23rd April 2020 to do so
How much will you get?
HMRC will give you a taxable grant of 80% of your average monthly profits over the course of the tax years : 2016-17, 2017-18 & 2018-19. If you were only self-employed for 2018-19, the average will be based on 12 months and if you were only self-empoyed for 2017-18, the average will be based on two years.
HMRC will add up the your total profits for the last three years to get your total trading profits and then divide this by three to get your average yearly trading profits. As above, the three years could be two years or one year depending on how long you have been self-employed for.
Once your average annual trading profit is known, HMRC will take 80% of this amount, and divide it by 12 to get the total per month. You will be given three months worth of this amount, up to a maximum of £2,500 per month.
Basic example
| Year | Trading Profits |
| 2016/17 | £23,000 |
| 2017/18 | £25,000 |
| 2018/19 | £27,000 |
| TOTAL | £75,000 |
| AVERAGE | £25,000 (£75,000 / 3 years that you were self employed for) |
80% of this is £20,000 per year. Monthly, this would be £1,666.67. Three months worth is £5,000.
The amount received will need to be reported on your tax return as taxable income in the 2020/21 tax year. It will also affect any tax credits that you receive, including universal credit. You will have to declare the income when making your claim in 2020/21.
Please note that this is basic example. We have not taken into account any elements of other taxable income such as investment income or employment income.
How to apply:
HMRC will analyse your 2018-19 tax return and contact you if you are eligible. The only way to access this will be via GOV.UK. Please be aware that fraudsters may contact you pretending to be HMRC. If in doubt – ask your accountant.
HMRC expect the taxable grant to be available in June 2020.
This grant will affect your tax credits/universal credit and you will need to declare the income received from the scheme when making a claim.
We will update this post as and when further information becomes available. If you have any questions on the self-employed income support scheme please contact us.
Other forms of support:
Advance payment deferral: The second self-assessment advance payment on account that you were due to pay on 31 July 2020 has now been deferred until 31st January 2021.
VAT deferral: Any vat due between April 2020 and the end of June 2020 will be automatically deferred until the 31st March 2021. Refunds will be paid as normal and you will still need to submit VAT returns on time. Find out more here.
Payment helpline: If you cannot pay your outstanding tax bill then you will need to contact HMRC and see you can defer these payments without paying a penalty. This applies to: VAT, self-assessment, employers’ PAYE & corporation tax. The number to call is 0800 024 1222.
Universal Credit: The government has raised the standard allowance by £1,000 for the next 12 months. Find out what you could be entitled to here or apply for Universal Credit here.
Government grants: Businesses registered for business rates who receive Small Business Rates Relief will be eligible for a £10,000 grant. Those in the retail, hospitality and leisure sector may be eligible for a grant of either £10,000 or £20,000 depending on their rateable value. Find out more here.