The Chancellor Rishi Sunak has announced measures to help the more than five million self-employed people in the UK throughout the coronavirus outbreak. Andrew Diver, head of tax at Beatons, looks at the package and how it is accessible.
In a nutshell, the new Coronavirus Self-Employment Income Support scheme will pay self-employed people a taxable grant worth 80% of their average monthly income with a capped limit of £2,500 per month. It will be calculated by using the average income over the past three years.
The scheme allows self-employed people to claim the grants and continue to work – a difference to the Coronavirus Job Retention Scheme where employees are furloughed and have to remain at home and not work.
The scheme will be available for at least three months and the grants will be paid in one lump-sum payment from the beginning of June, so it will not help with immediate cashflow problems.
The scheme is open to anyone with a trading profit of up to £50,000 – which covers 95% of self-employed people.
HMRC will use the average trading profits from tax returns filed in 2016/17, 2017/18 and 2018/19 to determine the size of the grant payable.
The new help is not applicable to those workers who are recently self-employed and do not have a full year of accounts.
The Chancellor announced a grace period for those who did not submit their tax return by the January 31 deadline and have not yet submitted one. These people have been granted an additional four weeks to file their tax return for 2019.
How do I claim help?
HMRC will use existing information to contact self-employed works who are eligible and ask them to complete an online application form. Once this is submitted and approved, the grant will be paid directly into their bank account.
People who pay themselves a salary or dividends through their own company will not be covered by the Self-Employment Income Support Scheme. They will have 80% of their salary covered by the Coronavirus Job Retention Scheme if they operate through PAYE.
Please contact us if you need any help in filing an outstanding tax return for 2019.