A new support package for self-employed workers was announced earlier this week by Chancellor Rishi Sunak.
Commenting on the much-anticipated support package announced by The Chancellor for self-employed workers affected by the coronavirus pandemic, Mark Simic, partner at Bovey Tracey-based Simpkins Edwards LLP, said: “For many, Chancellor Rishi Sunak’s package for the self-employed – whose income has been negatively impacted by COVID-19 – will have come as a huge relief. It means that – subject to meeting the criteria – they will receive financial support, although there will be a two-month wait until grants are payable at the start of June.
“The Scheme provides a grant worth 80% of profits up to a cap of £2,500 per month and is targeted at sole traders and partners of trading partnerships with earnings averaging less than £50,000 over the previous three years.
“To be eligible, among other criteria, you must have filed or plan to file a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional four weeks from this announcement to do so, and we would advise prompt action to avoid missing out.
“The bailout itself will be administered by HM Revenue & Customs who will contact all eligible individualsChancellor Rishi Sunakand will aim to make the payments, of up to £7,500, in June. What is yet to be determined in detail, is what ‘income negatively impacted by COVID-19’ means.
“What we do know is that the scheme will not help the newly self-employed, as only those registered to file a 2018/19 tax return will be eligible. It also appears that owners of limited companies who pay themselves a salary and dividend are not covered by the scheme. They may, however, be covered for their salary by the Coronavirus Job Retention Scheme if they are operating a PAYE scheme.”
To help the self-employed understand The Chancellor’s announcement more fully, Simpkins Edwards has put together the following ‘at-a-glance’ guide, which is accurate as of 26 March 2020.
The Self-employment Income Support Scheme – What is it?
The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships)Chancellor Rishi Sunakwhose income has been negatively impacted by COVID-19.Chancellor Rishi SunakThe scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.
Am I eligible?
To be eligible for the scheme you mustChancellor Rishi Sunakmeet all the criteria below:
Be self-employed or a member of the partnership;
Have lost trading/partnership trading profits due to COVID-19;
Have of will file a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
Have trading profits of less than £50,000 and more than half of your total income come from self-employment.Chancellor Rishi SunakThis can be with reference to at least one of the following conditions:
Your trading profits and total income in 2018/19
Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
How do I access it?
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account.
HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by the beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.
When can I access it?
HMRC is urgently working to deliver the scheme; grants are expected to start to be paid by the beginning of June 2020. This time is necessary to ensure that the scheme is both deliverable and fair. In the interim, the self-employed will still able eligible for other government support including more generous universal credit and business continuity loans.
For further advice and support, contact Simpkins Edwards on 01392 963 320 or visit the COVID-19 update page for regular information on measures introduced by the government for businesses affected by the Coronavirus/COVID-19 outbreak.
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