Self-employed individuals or partnerships
The government introduced the “self-employment income support scheme” to provide a grant to self-employed individuals or partnerships negatively impacted by COVID-19.
Self-employment income support scheme
If you have suffered a loss in income, a taxable grant will be paid to the self-employed or partnerships, worth 80% of profits up to a cap of £2,500 per month.
Initially, this will be available for three months in one lump-sum payment and will start to be paid from the beginning of June.
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Government advice: Individuals do not need to contact HMRC now and doing so could delay the work being undertaken to introduce the scheme.
Who is eligible?
Self-employed individuals and a those who are a member of a partnership. In addition, those eligible must have more than half their income from being self-employed and:
- have submitted your Income Tax Self-Assessment tax return for the tax year 2018/2019
- traded in the tax year 2019/2020
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020/2021
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018/2019 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016/2017, 2017/2018, and 2018/2019 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016 and 2019, HMRC will only use those years for which you filed a Self-Assessment tax return.
There a few individuals who have not submitted their 2018-19 Self-Assessment tax return and to qualify they now have until the 23 April 2020 to do so.
How to claim
HMRC will aim to contact eligible claimants “by mid-May” and invite those individuals to make a claim. The claim will be completed online via a portal that is currently being built.
What you will need to make your claim
You will need the following:
- Self-Assessment Unique Taxpayer Reference (UTR) number (this is a ten-digit number that you will find on the face of a tax return)
- National Insurance number
- Government Gateway user ID and password
- Bank account number and sort code of the account the grant should be paid to
As part of the application you will have to:
- Confirm to HMRC that your business has been adversely affected by coronavirus; and
- 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 have 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; this includes the amount claimed, the claim reference number and 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
Can HSA & Co complete the claim on your behalf?
Unfortunately, no. HMRC will only allow the taxpayer to make the claim; there are currently no plans to allow an agent to do this on the clients behalf.
A warning about scams
HMRC are warning that if you 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.
Deferral of Self-Assessment payment
The Payment on account payable no later than 31 July 2020 will be deferred until 31 January 2021. This is an automatic offer and no application is required and no penalties or interest for late payment will be charged in the deferral period.
Deferral of VAT payments
VAT payable between 20 March 2020 and 30 June 2020 can be deferred. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period and will not be charged interest or surcharges, but your VAT return should be filed on time as normal.
If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021. Businesses who normally pay by Direct Debit should cancel their Direct Debit with their bank if they are unable to pay.
Understand your cash flow
Now, more than ever, is an important time for businesses to make a cash flow plan. You need to know if, and if so when, you will run out of cash in this crisis. Be in control of your cash flow, not the other way around.
Use our downloadable resources to obtain tools to help you to do this.
Coronavirus business interruption loan scheme
The coronavirus business interruption loan scheme (CBILS) is now available through participating lenders.
CBILS is a new scheme that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance. The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower always remains 100% liable for the debt.
In the first instance you should contact your bank, normally via an online application.
Bounce back loan – a government finance scheme for small businesses
Coronavirus has caused disruption for many small business owners, leaving them with flow issues. Government schemes such as CBILS are typically more suitable for established small businesses, leaving those with smaller turnovers and less trading time to fall through the cracks.
The scheme will offer small businesses 100% government guaranteed loans of between £2,000 and £50,000, with no repayments, interest or fees payable for the first 12 months. The loans have terms of up to six years and boast fast application times to help make funds available as soon as possible. The government will work with lenders to agree a low rate of interest for the period of the loan. The 100% guarantee covers the losses of the lender, so the borrower remains 100% liable for the debt.
The scheme will launch for applications on Monday 4 May. Businesses will be able to access these loans through a network of accredited lenders.
Business rates and cash grants
To help businesses, the Governments of England, Scotland, Northern Ireland and Wales announced a series of business rate and cash grant packages to help them through the coronavirus outbreak.
See our dedicated business rates and cash grants section of our website to understand more.
Would you like to know more?
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