The Government have announced the package of support available for the self-employed who are impacted by the COVID-19 pandemic. The full details can be found here, but below is our summary of the key features.
- The scheme provides a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months.
- Applies to those who are self-employed or members of a partnership who submitted an Income Tax Self Assessment tax return for the 2018/19 tax year.
- You must have lost trading profits because of COVID-19. You do not have to have stopped working completely.
- You must have continued to trade in 2019/20 and still be trading when you make the application, or would be if not for COVID-19, and intend on continuing to trade.
- Your trading profits must be less than £50,000 and more than 50% of your total income, either in 2018/19 or in the average of the 2016/17, 2017/18 and 2018/19 tax years.
- The average monthly profits will be calculated based on the 2016/17, 2017/18 and 2018/19 tax years. If you started to trade during this period then the average will be based on the tax years in which you were trading.
- If you have not submitted a 2018/19 tax return but should have, then you have until 23 April 2020 to do so if you want to access this scheme.
- The current 3 month period may be extended if needed.
- You do not need to apply for the grant. HM Revenue & Customs have all of the information they need from the tax returns you have submitted and will contact you if you are eligible and ask you to make a claim.
- Those who started to trade after 5 April 2019 will not qualify.
- The scheme does not apply to landlords and property letting businesses, including furnished holiday lets.
The payment of the grant will be in a single lump sum to cover the three months from March to May and will be paid in June directly into the bank account of those who are eligible.
What about director/shareholders of limited companies?
The guidance is very clear that it does not apply to the directors and shareholders of limited companies. Directors who receive a salary from their company may be eligible to claim a grant under the Coronavirus Job Retention Scheme if they have to stop working completely. There is currently no provision or support available to replace or contribute dividend income.
Visit our COVID-19 Support Hub for more information about additional support that is available.