- You need to be self-employed either as an individual or a member of a partnership.
- You have been trading in the 2019/20 tax year.
- You are trading when you apply, or you would be but for the Coronavirus.
- You have lost trading/partnership income due to the COVID-19.
- You either must have already submitted your 2018/19 Tax Return or do so by 23rd April 2020 to be eligible. In the latter case, HMRC will be risk assessing those ‘late’ returns.
- Your self-employed income must represent more than 50% of their total taxable income.
- Your trading profit must be less than £50,000 based upon the average of your last 3 years of trading i.e. 2016/17, 2017/18 and 2018/19. If you started trading between 2016 – 2019 then HMRC will only use those years for which a SA Return has been filed.
Important to Note
- If you started trading during the 2019/20 tax year you won’t, at present, be eligible for the scheme. Universal credit and/or the Coronavirus Business Interruption Loan Scheme might be the route to down. Pressure is already being put on the Government in this respect to relax the scheme.
- If your average profits are £50,000 or more, at present, you won’t be eligible for the scheme. Again, Universal credit and/or the Coronavirus Business Interruption Loan Scheme might be the route to go down. Pressure is already being put on the Government in this respect to relax the scheme.
- You can still benefit from the scheme if you are still trading but your trading income has been affected by COVID-19.
- This scheme is not eligible for directors in Personal Services companies.
What is the entitlement?
- The taxable grant will be 80% of the average profit figure and then divided by 12 to break down into the monthly payments. The scheme is initially set up to run for three months.
- The maximum monthly pay out will be £2,500.
- HMRC will pay it directly into your bank account.
How to apply
- You cannot apply for the scheme yet.
- HMRC will be reviewing the 2018/19 tax year submissions and presumably earlier years as well to see who might be eligible.
- HMRC will then contact the taxpayer direct after having carried out the review and will ask them to access the scheme via Gov.UK website.
- Please be warned that scams from people who may use this opportunity to send emails, texts or phone calls to ask you to provide bank and credit card details to get your grant. It will only be accessibility through the Gov.Uk portal.
- The payments are likely to only come through in early June. This could put pressure on some clients. The Government are already under pressure to move the payment forward.
Companies Filing Date Extended
If the accounts are likely to be late because of COVID-19 and the deadline for filing the company accounts has not yet passed, you can apply for an automatic and immediate 3 month extension to filing the accounts. The link is shown in full below.
Companies that have already extended their filing deadline or shortened their accounting reference period may be ineligible for an extension.
VAT and Income Tax Deferral
I know I have already mentioned that VAT payments due before 30th June 2020 will not now need to be made until the end of the tax year and self-assessment payments on account will not need to be paid until 31st January 2021, however there are two new things to mention:
- If you have set up a direct debit to meet either or both of these liabilities please cancel the direct debit if you have not already done so.
- The 31st July payment was originally thought to relate only to the self-employed. It now relates to anybody with a 31st July payment if they choose to do so.
Coronavirus Job Related Scheme Further update
- If someone was made redundant after 28th February, the ex-employer can re-employ them and then furlough to cover the 80% monthly earnings.
- If someone has more than one employer and can continue to work for another, your client employer can furlough that employee if it is permitted within their contract to have more than one job.
- Official HMRC update:
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
Produced by Shaz Nawaz 30th March 2020