If you’re self-employed or a member of a partnership and have been adversely affected by coronavirus (COVID-19) find out if you can use this scheme to claim a grant.
The scheme will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. This is a temporary scheme, but it may be extended.
If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
The grant will be subject to Income Tax and self-employed National Insurance.
HMRC will work out if you’re eligible and how much grant you may get. But you can follow these steps to help you understand how they will do this and what you can do now.
1. Find out who can claim.
2. Check online if you’re eligible and when you’ll be able to claim.
3. Find out how HMRC calculates your grant.
4. Find out how you’ll make a claim when the online service becomes available.
5. Find out when you’ll get the money paid into your bank and how to record the grant.
WHO CAN CLAIM? (YOU CAN NOT CLAIM IF YOU ARE A DIRECTOR)
You can claim if you’re a self-employed individual or a member of a partnership and:
- you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the tax year 2020 to 2021
- you carry on a trade which has been adversely affected by coronavirus
(You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.)
To work out your eligibility HMRC will first look at your 2018 to 2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income. Trading profits are the taxable profits as shown on your Self-Assessment tax return and are therefore after deducting expenses, capital allowances but not brought forward trading losses.
If you’re not eligible based on the 2018 to 2019 Self-Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
Find out here how HMRC will work out your eligibility.
(https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme)
Unfortunately, we as your agent cannot make the claim for you. You must make the claim yourself. However, please contact us if you require any help or support
The following circumstances will affect the scheme and your eligibility
(https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme)
- if your return is late, amended or under enquiry
- if you’re a member of a partnership
- if you’re on or took parental leave
- if you have loans covered by the loan charge
- if you claim averaging relief
- if you’re non-resident or chose the remittance basis
- if you’re above the state aid limits
Check if you’re eligible to claim
You can HMRC’s online tool to find out if you’re eligible to make a claim.
(https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference)
You’ll need your:
- Self-Assessment Unique Taxpayer Reference (UTR) number
- National Insurance number
If you’re eligible HMRC will tell you the date you’ll be able to make a claim from and ask you to add your contact details.
If you’re not eligible and HMRC have told you that you’re not eligible to make a claim, you can ask them to review this after you’ve used the online tool. If you want to do this at a later time, you’ll be able to use the online tool more than once.
HOW MUCH WILL YOU GET ?
You’ll get a taxable grant based on your average trading profit over the 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then they will divide by 3.
The grant will be 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. The online service will tell you how they’ve worked the grant out.
The grant amount they work out for you will be paid directly into your bank account, in one instalment.
Find out how they will work out your average trading profits including if you have not traded for all 3 years.
(https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme#threeyears)
HOW TO CLAIM
The online service will be available from Wednesday 13 May 2020. If you’re eligible, HMRC will tell you the date you can make your claim from. If your claim is approved you’ll receive your payment within 6 working days.
You do not need to contact HMRC now, as this will only delay the urgent work being undertaken to introduce the scheme.
If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to phishing@hmrc.gov.uk and then delete it.
When you make your claim you’ll only need your:
- Self-Assessment UTR
- National Insurance number
- Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online. (See * below)
- bank account number and sort code
* (Please note :- ICAEW’s Tax Faculty advises against clients setting up a new government gateway ID in advance of making an application, but instead doing so as the first step in the application process. This will ensure that the correct type of credentials are set up and avoids the need to wait for an authorisation code in the post.)
(HMRC will be providing a telephone-based application service for the digitally excluded, further details are awaited. )
You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.
If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits.
HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.
AFTER YOU HAVE CLAIMED
Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.
You must keep a copy of all records in line with normal self-employment record keeping requirements, including:
• the amount claimed
• the claim reference number for your records
• evidence that your business has been adversely affected by coronavirus
You will need to report the grant:
• on your 2020/2021 Self-Assessment tax return
• as self-employed income for any Universal Credit claims
• as self-employed income and that you’re working 16 hours a week for any tax credits claims
TOP UP TO LOCAL BUSINESS GRANT FUNDS SCHEME
The government have announced an additional fund of £617 million which is aimed at small businesses with ongoing fixed property-related costs who have been unable to claim under the existing small business grants fund or the retail, hospitality and leisure grants fund.
The government are asking local authorities to prioritise businesses in shared spaces (such as serviced offices), regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. But local authorities may choose to make payments to other businesses based on local economic need. The allocation of funding will be at the discretion of local authorities.
It is very unlikely that the new relief will be applicable to those businesses who work from home.
Businesses must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to Coronavirus restriction measures. There will be three levels of grant payments. The maximum will be £25,000. There will also be grants of £10,000. local authorities will have discretion to make payments of any amount under £10,000. It will be for councils to adapt this approach to local circumstances.
We are expecting further guidance next week in this respect and will provide any further updates in due course.
In the meantime please stay safe and well.
