Who’s eligible ?
First up its worth mentioning who is not eligible. Landlords and Company Directors cannot apply to this scheme.
You can apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self -Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be trading except for Coronavirus
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to Coronavirus
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. HMRC is determining this by at least one of the following conditions being true:
- you have trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits make up more than half of your total taxable income
- you have average trading profits in 2016-17, 2017-18, and 2018-19 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 anywhere between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return so this can be an average of one, two or three years Returns.
If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you now have the opportunity to do this and still make a claim. You must do this by 23 April 2020.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
On the face of it this seems to exclude any individuals who only started trading in the 2019/20 tax year and therefore did not file returns in the previous three years. There has been some speculation however that HMRC may be able to look at records from this year alone to work out some sort of support. This has not been confirmed but things are changing so rapidly. If you fall into this category, we advise you to submit your records to us as soon as you can so we can process your 19/20 tax return.
Remember that if you are claiming tax credits you’ll need to include the grant in your claim as income.
It is not clear yet how either working or claiming Universal Credit during this period will affect your grant. We would therefore advise you to keep records and dates of when you claim Universal credit or do any form of trading in this period. What seems clear is that if you are not receiving any trading income during this period or any Universal credit you will be entitled to the full 80% of trading profits. This hopefully gives individuals some peace of mind that they will be reimbursed for 80% albeit in June 2020. As details become available from HMRC on this we will update you here.
One thing to note is that the final grant awarded to you will be taxable.
How much can I get?
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount.
It will be up to a maximum pay out of £2,500 per month for 3 months and this will be paid directly into the bank account that HMRC hold details of.
How can I apply?
You cannot apply for this scheme yet but HMRC will contact you if you are eligible for it and invite you to apply online.
HMRC are asking that individuals do not contact them now and wait to hear from them. They are also warning that this scheme can only be accessed through the gov.uk website and to be aware of any scams such as texts or emails asking for any details from you. Please be aware of this. They already hold your personal details and in many cases your bank details so will not ask you for this information.
What happens after I apply?
Once HMRC has received your claim and you are considered eligible for the grant, they will contact you to tell you how much you will get and the payment details.
Remember you will also be able to apply for other help such as deferral of payments on account in July 2020, business rate grants and you can still apply for business interruption loans through your bank.
While we make every effort to make sure this update is accurate, you should take professional advice before acting on the information provided here. If you contact us we will be happy to help. Beans cannot take any responsibility for actions taken and losses incurred as a result of actions taken or not taken on the basis of the information provided here.