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"You have not been forgotten" - Sunak pledges support for the nation's self-employed

"You have not been forgotten" - Sunak pledges support for the nation's self-employed

The Government has now unveiled its much anticipated support package to benefit around 3.8 million of the 5 million self-employed in the UK.  This will come as a lifeline for many.

The Support Scheme

If eligible, the individual will receive a grant of up to £2,500 per month for a minimum of 3 months to May 2020 (ie backdated to March) but paid in a single lump sum covering all three months.

However:

Only those who are already in self-employment and who meet the trading profits conditions will be eligible to apply.

These grants will be taxable on 2020/21 Income Tax Returns and tax due 31 January 2022.

Additional eligibility criteria must be satisfied:

  • The individual must have lost trading profits due to COVID-19
  • They must have traded in 2019/20, intend to trade in 2020/21 and be trading at the point of application (or would have been except for COVID-19)

The scheme is also available to individuals in Partnerships.

However, there are two key conditions attaching to the scheme.  People will only be eligible to claim where their trading profits are below £50,000 (in either 2018/19 or as an average over the last 3 tax years).  In order to qualify, more than half of the individual's income from these tax years must be derived from self-employment.

The mechanics

HMRC will identify eligible taxpayers (using data on 2018/19 Tax Returns already submitted) and contact them directly with guidance on how to apply.  Payments to be received in June 2020 and be paid directly into people's bank accounts.

Individuals should not contact HMRC now.  HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.

Once HMRC receive the claim and confirm eligibility they will contact taxpayers and confirm the amount to be paid and ask for payment details.

We would like to remind our clients that HMRC do not send texts or make calls asking for bank or credit card details.  If this happens, then it is likely to be a scam.

Other points to note

If you have not submitted your Income Tax Self-Assessment Tax Return for the tax year 2018/19, you must do this by 23 April 2020.  HMRC will risk-assess any late Returns filed before the 23 April 2020 deadline in the usual way.

If you started trading between 2016 and 2019, HMRC will only use those years for which you filed a Self-Assessent Tax Return.

If self-employment started after 5 April 2019 then this scheme will not apply.

The Government have confirmed that a more generous Universal Credit system will be available to the self-employed while waiting for the grants.  The grant needs to be included on Universal Credit claims as income.

If you would like to discuss your eligibility for the Government's self-employed package, please contact Dyke Yaxley's Tax Team Manager, Martyn Bramwell, by email at martyn.bramwell@dykeyaxley.co.uk.

Dyke Yaxley's Tax Team Manager, Martyn Bramwell