HMRC have introduced a scheme to help protect self employed individuals during the Coronavirus pandemic. I have detailed below some key points:
Taxable grant and should be treated as taxable income
You will receive 80% of your average profits up to £2500 per month
Your tax return for 2018/2019 must be completed (deadline was 31st January 2020)
You can still operate your business and claim the grant
HMRC will write to you if you are eligible – you do not need to contact them
Grant will be paid in a lump sum in June
Scheme is not open yet but HMRC are busy working on it.
Further information in more detail:
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended should the situation continue
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 2018-2019
traded in the tax year 2019-20
are trading when you apply, or would be except for COVID-19
intend to continue to trade in the tax year 2020-21
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 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
having 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 between 2016-2019, HMRC will only use those years for which you filed a Self-Assessment tax return.
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
How much will you get:
You will 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 up to a maximum of £2,500 per month for 3 months.
HMRC will pay the grant directly into your bank account, in one installment.
How to apply:
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
You do not need to contact HMRC and doing so will only delay the urgent work being undertaken to introduce the scheme.
If you have any questions regarding the scheme, please get in touch with us at solutions@apexpb.co.uk
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