These are very strange times, but we must try and make the most of it and particularly avail of any help the government are giving to us.
From 13 May 2020 Self-employed individuals will be able to claim a grant through the Self-Employment Income Support Scheme, but ahead of that you can get yourself ready, check your eligibility and have to hand the information you need to make your claim.
Unlike the grants for businesses who operate from premises that pay non-domestic rates, the Furlough scheme claim and applications for Business interruption and Bounce back loans, we as your advisor WILL NOT be able to submit a claim for the self-employment grant on your behalf. This MUST be completed and submitted online by YOU as the taxpayer.
This is an anti-fraud measure brought in by the government. In order for agents like ourselves to have been allowed to submit the application on your behalf, the government are suggesting this would have taken at least a further 2 months to get this in place so this was not an option for this time.
We are of course here to guide you through this and please do not be afraid to contact us as we will be delighted to help you through the process and answer any queries you may have. We are all in this together!!
Who can claim
There is some confusion firstly what Self-Employment means. There are a number of different types of income that a person can earn each year such as employment income, Income from Land & Property, Self-Employment Income, Partnership Income, UK Dividends, Interest Income etc… If you are unsure, please get in touch with us and we can advise.
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
- submitted your 2018 to 2019 tax return on or before 23 April 2020
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the current tax year of 2020 to 2021
- you carry on a trade which has been adversely affected by coronavirus
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 must make up at least 50% of your total income.
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 and if your average income over those years from Self-Employment is less than £50,000 and makes up on average less than 50% of the total income you will be eligible.
HMRC have now launched an online tool to check if you are eligible to make a claim. We as your tax agent/adviser can also use this tool on your behalf. You simply need your:
- Self-Assessment Unique Taxpayer Reference (UTR) number – This is a 10 digit reference 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. HMRC will use these to remind you when the online service will be available.
If you’re not eligible
If HMRC have told you that you’re not eligible to make a claim, you can ask HMRC 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 you’ll 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 we 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. HMRC’s online service will tell you how they have worked the grant out. The grant amount HMRC work out for you will be paid directly into your bank account, in one instalment.
How to claim
The online service will be available from 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.
If you’re unable to claim online an alternative way to claim will be available. HMRC will update this page with more information soon.
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 firstname.lastname@example.org and then delete it.
Information needed to make your claim
When you make your claim You’ll only need your:
- Self-Assessment UTR – 10 digit number
- 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
- bank account number and sort code you want HMRC to pay the grant into (only provide bank account details where a Bacs payment can be accepted)
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’ve 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 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 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
Any questions about this, please get in touch with us. We are here to help you through this and help you to get the financial support you are entitled too.
Take care of yourself and stay safe. We are all in this together.