COVID-19 / Support for the self-employed

COVID-19 / Support for the self-employed
Author
Published
April 9, 2020

It’s good news at last for the self-employed!

The chancellor announced yesterday evening that you can get a taxable grant up to a maximum of £2,500 a month, for 3 months.

CAN I APPLY?

Yes, IF you’re self-employed or a member of a partnership

AND if:

  • You’ve submitted your 2018/19 tax return (this was due 31 January 2020)
  • You’ve traded in the tax year 2019/20 (that’s 6th April 2019 to 5th April 2020)
  • Are currently trading & affected by COVID-19
  • You intend to continue trading in the tax year 2020/21 (that’s 6th April 2020 onwards)

OTHER KEY INFO

The scheme will be open to those with a trading profit of less than £50,000 in 2018/19, or an average trading profit of less than £50,000 from 2016/17, 2017/18 and 2018/19.

Those who are recently self-employed (since 6th April 2019) and do not have a full year of accounts will not receive any help under this scheme.

Sounds good – 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

Just to spell it out: the average is the total trading profit for the 3 tax years (where applicable) , divided by 3 (where applicable).

This average then gets divided by 12 to calculate a monthly average

You will get the lower of:
That monthly average
or £2,500 per month

HOW LONG WILL THIS HELP LAST?

Currently, just 3 months. But that may increase.

HOW WILL IT BE PAID?

Directly into your bank account. In one instalment.

HOW DO I APPLY?

⛔There’s nothing you can do yet. DO NOT CONTACT HMRC YET!⛔

⚠️They’re desperately trying to put together the systems in place to help you – calling them will only delay them….!⚠️

WHAT NEXT?

So once HMRC contact you ASAP, and once you’ve applied, HMRC will verify that you’re eligible and if so they’ll confirm how much you will get.

WHEN WILL I GET PAID?

?The chancellor said “from the beginning of June”?

?The maximum you’ll get is £2,500 x 3 = £7,500

?If your average monthly earnings are smaller than £2,500 , you’ll get that smaller amount x 3.

This will be classed as taxable income.

HERE’S AN ILLUSTRATION

Let’s say you had profits of £20,000 , £18,000 & £17,000 for the last 3 tax years.

That means you had an average profit of £18,333 per year.

£18,333 / 12 = £1,527pm

HMRC will pay you 3 x £1,527 = £4,581

WHAT WERE MY PROFITS?

♦️If you’re our client, this will be written on your tax calculations that we sent you.
♦️You can also log into your HMRC portal/login & see for yourself.

♥️♥️ But because we’re awesome, we’ll be writing to you with your profits, and what we think you will be getting from HMRC … so please hold tight!

??‍?WHAT ABOUT IF I PAY MYSELF A SALARY & DIVIDENDS FROM MY OWN LIMITED COMPANY???‍?

Those who pay themselves a salary and dividends through their own company are not covered by the scheme but they will have 80% of their salary covered by the Coronavirus Job Retention Scheme if operating through PAYE.

?Dead Simple Accounting will be emailing all those applicable limited company directors today (27th March) about this.?

?Dead Simple Accounting will be writing to all our self-employed clients with your profits, and what we think you will be getting from HMRC … so please hold tight!?