Covid-19: Self-Employed: The Income Support Scheme
A self-employed individual (including a partner in a partnership) may claim support in the form of a grant under the Self-employed Income Support Scheme (the ‘Scheme’).
An individual is eligible for the Scheme where they satisfy all of the following conditions:
- they have submitted their tax return for 2018/19. If the return has not yet been filed, they have until 23 April 2020 to submit it to HMRC;
- they carried on a trade in 2019/20;
- they are trading when they apply for the Scheme, or would be except for COVID-19;
- they intend to continue to trade in 2020/21; and
- they have lost trading profits due to COVID-19.
A person is excluded from the Scheme where they are a high earner or where they have significant other income. The exclusion applies unless at least one of the following tests is met:
- for 2018/19, their trade profits are less than £50,000 and their trade income amounts to more than half of their total taxable income; and
- on average over the three years ended 2018/19, their trade profits are less than £50,000 and their trade income amounts to more than half of their total taxable income.
A person trading through a limited company is not eligible for the Scheme. They should consider the Coronavirus Job Retention Scheme in respect of their salary.
Those who commenced self-employment on or after 6th April 2019 are not eligible for this scheme.
The grant is payable for each of the three months ended 31 May 2020. 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
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.
It will be up to a maximum of £2,500 per month for 3 months.
HMRC will pay the grant directly into your bank account, in one instalment.
HMRC will contact eligible individuals and invite them to apply online. It is expected HMRC will write rather than email, phone or text. Should you receive any suspicious emails, phone calls or text messages, please do not hesitate to contact aimee@af-accounting.co.uk
Deferral of 31 July 2020 payment on account
The second payment of account (POA) for 2019/20 – due on 31 July 2020 – has been deferred until 31 January 2021. No penalties or interest will be charged in respect of the deferral period.
This change applies automatically; i.e. there is no need to apply to HMRC for the deferral.
Claiming Universal Credit
The person is able to claim Universal Credit, providing they meet the usual criteria.
The following changes related to COVID-19 have been made to Universal Credit:
- from 19 March 2020, all requirements to attend the jobcentre in person are suspended; and
- from 6 April 2020:
- the standard allowance will be increased by £20 per week; and
- the requirements of the Minimum Income Floor will be temporarily relaxed.
By way of an example, from 6 April 2020, a single Universal Credit claimant aged 25 or over will be entitled to a standard allowance of £409.89 per month.
Support for rent costs is paid through Universal Credit. From April, the Government is increasing Local Housing Allowance rates to the 30th percentile of market rents.
A new claim for Universal Credit may be made here.
Existing claimants should report a change in their circumstances through their online journal
THIS GUIDANCE IS ACCURATE AS OF 31 MARCH 2020. SHOULD YOU HAVE ANY QUERIES OR WISH TO DISCUSS ANY IMPLICATIONS PLEASE CONTACT US.