The Chancellor announced his long awaited support for the self-employed. The Self-Employed Income Support Scheme announced on 26 March 2020 and provides the following support: OBP CHARTERED ACCOUNTS in Cardiff have been looking at this for us and detailed the plans.
- A taxable grant of 80% of average monthly profits over the past three years.
- Capped at £2,500 per month.
- For 3 months initially.
- Applies to self-employed individuals with trading profits up to £50,000 per year whose majority of income comes from being self-employed.
- You must be registered as self employed and have filed a 2019 tax return.
- For those who missed the 31 January 2020 return deadline there is now a 4 week period in which to file one.
- The scheme is expected to commence paying out in June 2020.
- HMRC will contact registered taxpayers, ask you to fill in a simple online form and the grant will be paid directly into your bank account.
However this has lead to numerous questions. Here are some examples of questions we have received so far…
Q.What if my self-employed business is new and I haven’t completed a tax return yet?
A. Initially, it looks as if there is no support available to you. HMRC will contact all those who filed 2018-2019 returns to process the grant. Maybe not all hope is lost though. On Question Time on 26th March a government minister suggested the self-employed could approach HMRC with records to request support. The 2019-2020 tax year will end on 5th April 2020 and you will be able to submit tax returns from the 6th April 2020. The support is not being paid until June so hopefully HMRC will be able to review these latest returns when deciding who qualifies for the grant?
Q.I have employed work as well as self-employed work. What support will I get?
A. You will only get self-employed income support if it was >50% of your total income. Hopefully, you will be receiving support from the job retention / furloughed workers scheme from your employer.
Q.I work through a Limited company and pay myself a nominal salary and a dividend.
A. It is possible to put ‘furlough’ a director and therefore access the Employee Job Retention Scheme. This means you will get 80% of the salary cost reimbursed through the scheme. We are still waiting on some clarity on how this will work in practice.
There is no support available for those suffering a shortfall in dividend income. The government have commented it would be too complicated to develop a support package around dividend income.
Q.What support do I get if I earn more than £50,000
A.The self-employed income support is not available for those with profits in excess of £50,000. Your payment on account at the end of July 2020 has been deferred to January 2021 and therefore this should help a bit with cashflow. There is also the business interruption loan scheme and business rates support that might provide additional support.
Finally, if you are not working at the moment I believe it is the ideal time to get your records ready for the 2019-20 tax year so you can send all your records to HMRC as soon as possible and maximise the opportunity to access the Self-Employed Income Support grant.
Here is a link to the government’s website for the Self-Employed Income support scheme SUPPORT and the Job retention scheme here. RETENTION
OBP will be sending out regular updates and further clarification on how the Government Coronavirus schemes will be put into practice. If you require any further information please contact OBP here firstname.lastname@example.org