Self-employment income support scheme goes live on 13 May 2020

The Coronavirus Self-Employment Income Support Scheme was announced back in March, and gives the self-employed a grant of up to £7,500 if their business has been affected by COVID-19.

HMRC have confirmed that the scheme will go live at 8am on 13 May 2020 (next Wednesday) and they are sending out emails and other communications to taxpayers inviting them to make a claim on/after that date.

As a quick recap, the scheme allows eligible self-employed taxpayers to claim a grant equal to 80% of their average monthly trading profits for a period of 3 months, subject to a cap of £7,500 in total.

Anyone adversely affected by COVID-19 can claim and, importantly, they can continue to work, start a new trade, or take on other employment and still receive the grant.

We had hoped that it would be possible for us to submit claims on behalf of self-employed clients, but unfortunately it has been confirmed that the taxpayer themselves must submit the claim. Of course, we will be on hand to help with any required information, and as HMRC have the past profit information on their systems the claim itself is expected to be quite a simple process.

So, who is eligible to claim? You can claim a grant if ALL of the following statements are true:

• You were self-employed* in the 2018/19 tax year;
• You submitted your 2018/19 tax return before 23 April 2020;
• You have traded in the tax year 2019/20;
• You intend to continue to trade in the tax year 2020/21; and
• You carry on a trade which has been adversely affected by Coronavirus

*self-employed individuals include sole traders, partners in a partnership and members of an LLP

Examples given for being adversely affected by Coronavirus include: those shielding, self-isolating or on sick leave; those with caring responsibilities because of Coronavirus; and those that have to scale-down or temporarily stop trading, for example due to a drop in customers, or issues getting supplies.

If you’ve read this far and think you should be eligible, the next hurdle is that your annual self-employed profits must be under £50,000, and more than half of your taxable income must come from self-employment. To qualify under this condition, one of the following statements must be true:

• Your self-employed profits in 2018/19 were less than £50,000 AND these profits constituted more than half of your total taxable income for that year; or
• Your average self-employed profits in 2016/17, 2017/18 and 2018/19 were less than £50,000 AND that averaged profit constituted more than half of your average total taxable income for those 3 tax years.

If you haven’t been self-employed for all 3 years, they will just use the years for which you filed Self-Assessment tax returns during that period for the averaging test, pro-rating as necessary where you commenced part way through a tax year.

HMRC have launched an online tool which you can use to see if HMRC think you are eligible to claim which you can find here. You will need your 10 digit Unique Taxpayer Reference Number (which can be found at the top of any HMRC letters or statements) and your National Insurance Number to use this tool. HMRC will base the result on the information they hold. Please note that this tool only tells you if you are eligible – it doesn’t calculate how much you can claim.

How much will you get? You’ll receive a taxable grant which will be based on 80% of your average trading profits for the tax years 2016/17, 2017/18 and 2018/19, converted to a monthly amount, up to a maximum of £2,500 per month. If you haven’t been self-employed for all 3 of those tax years the grant will be based on an average of the available tax years instead. It is expected that HMRC will calculate your claim, but we will be on hand to check this where required.

The grant will be paid directly into your bank account in one instalment within six working days of the claim submission.

IMPORTANT: To claim the grant you will need a Government Gateway user ID and password. If you don’t have one already use the link above to check you are eligible and then you can create one from there. You’ll also need to provide your bank details for the bank account you want the grant to be paid into.

One of our team will be in touch with eligible clients to ensure they have a Government Gateway account in place and to talk you through how to set one up where needed.

Then you’ll be ready to make the claim on/after 13 May 2020. The claim itself should be very simple but you’ll need to confirm to HMRC that your business has been adversely affected by Coronavirus.

For further advice on this matter, please contact your Client Manager.