Who does this apply to?
This scheme applies to self-employed people (sole traders) and members of a partnership.
Does this apply to company directors of a Personal Service Company?
No. They receive assistance in the form of SSP, CJRS and various other measures.
What is the criteria for making an application for the scheme?
- you must have submitted your 2018-2019 self assessment tax return
- you must have traded in the 2019-2020 tax year
- you are still trading or would have been if it wasn’t for COVID-19
- you intend to continue trading in the 2020-2021 tax year
- you have lost trading profits due to COVID-19 AND
- your trading profits must be less than £50,000 and makes up more than half of your income.
How is the £50,000 limit calculated?
This is determined by at least one of these statements being true:
- your self employed or partnership profits in the 2018-19 is less than £50,000 and makes up more than half of your income.
- you have an average trading profit in the three tax years 2016-2017, 2017-2018 and 2018-2019 of less than £50,000 and this makes up more than half of your average income over the same period.
What if self-employment/partnership started in the 2017-2018 tax year? How is the £50,000 limit calculated?
Either statement 1 above is true and/or the average trading profit in 2017-2018 and 2018-2019 tax years is less than £50,000 and makes up more than half of your average income over the same period. If one of these is true then you qualify for the scheme.
What if self-employment/partnership started in 2019-2020 tax year i.e. after 5 April 2019?
Unfortunately you won’t be eligible for this scheme. You should look to see if you can apply for Universal Credit or new style Employment and Support Allowance.
What if you are self-employed AND employed through PAYE elsewhere?
You will be eligible to apply for the scheme provided you meet the criteria mentioned above. If your income or average income from self employment is less than half your income, you don’t qualify for this scheme.
What if you were self-employed prior to the start of 6 April 2019, stopped trading and went into permanent employment?
You don’t qualify as you must have traded in the 2019-2020 tax year.
What if you haven’t yet filed your 2018-19 tax return yet?
Besides it being late, you have until 23 April 2020 to submit it.
It’s established that you qualify. How much are you entitled to?
You’ll get a taxable grant of 80% of the average profits from the tax years 2016-2017, 2017-2018 and 2018-2019 (or whichever years are applicable) capped at £2,500 per month for 3 months.
What does “taxable grant” mean?
This means you won’t have to pay it back as it’s a grant rather than a loan. However, it will be treated as income for self-employment purposes and subject to the applicable income tax rates.
How do I claim this?
You do not need to do anything. HMRC will contact you to invite you apply online through GOV.UK once they have established that you’re eligible.
What happens once they approve your grant?
They will contact you to let you know how you will be getting and take payment details so they can pay you.
Will HMRC contact me by text, phone or email to let me know I have a tax refund or have financial help and to claim it by following a link?
No. This is a scam. HMRC will never ask you to click a link. They will only ever write to you by post if there is tax due or a refund is waiting to be paid to you. You can always log into your online account at GOV.UK or call them directly.
When can you expect the grant to be paid to you?
June 2020. This is a new scheme and so HMRC are still creating the systems to make this operational.
Do you have to stop trading if you claim the grant?
No. Unlike furloughed workers under PAYE who aren’t allowed to work, self -employed people can continue to trade.
If you have any specific questions that have not been answered above, please contact us or leave a comment below.