Finally the government have announced a coronavirus self-employment income support scheme to assist those not in PAYE employment.  The scheme will pay a taxable grant of 80% of your average profits of the last 3 years for the next 3 months, and this will be extended if necessary.  The scheme will work as follows:

  • You need to have
    •  submitted a tax return for 2018/19
    • continue to be self employed now
    • lost profits due to COVID-19
    • have profits of less than £50k for 2018/19
    • have average profits over the 3 years 2017, 2018 and 2019 of less than £50k
  • This means the following will not qualify
    • Anyone who has started trading after 6 April 2019
    • Anyone with profits for 2018/19 over £50k
    • Even if 2018/19 is under £50k, if you add in the previous 2 years and that takes the average over £50k you will not be able to claim
  • How to claim
    • HMRC will advise all taxpayers whose self employed income is under £50k for 2018/19
    • You will then be invited to apply online, at which point you will presumably enter your bank details
    • A single payment for the 3 months will be made direct to your bank account
    • You do not need to contact HMRC in advance, be aware that there could be scam texts, calls or emails from HMRC – do not give any information
  • Points to note
    • If you started after 6 April 2016 then the period the average is taken over will be reduced
    • You can continue to work while the scheme is in operation (this does not appear in the HMRC guidance but has been widely stated in the press)
    • The funds received are taxable so will need to be declared on your 2020/21 tax return
    • The other main support for self employed is the deferment of the July payment on account until January 2021
  • An example based on profits for:
    • 2018/19 £30000 – less than £50k so HMRC will advise you are eligible
    • 2017/18 £36000
    • 2016/17 £24000
    • Average is £30000, ie £2,500pm
    • The government will pay 80% (£2000) for 3 months
    • £6,000 will be paid into your account

The coronavirus self-employment income support scheme has been long awaited and will be welcomed by this 5.5m people who are self employed, although a number do not qualify.  The details appear relatively straightforward as they are based on profits declared to HMRC so it should be possible to forecast the amount that will be received, although until the final details are confirmed this should not be relied on.  Unless the government extend the period above 3 months it appears this will be the end of support they are offering.  You should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”