Self-employed workers are now eligible for financial support if affected by the coronavirus outbreak.
The Chancellor announced last week the measures – but eligible contractors and freelancers have to wait until June before being paid.
The government’s announcement implied that if you’re a startup and have never submitted a self assessment then unfortunately you won’t be eligible.
However, the government has clarified that if you have traded in 2019-20, are 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 then you will be eligible. HMRC will have strict measures in place to avoid fraudulent claims.
People who work for themselves will be able to claim up to 80% of their trading profits if the pandemic has affected them. Each self-employed worker has to prove they have been affected.
The payment is a grant, which is taxable. There are worries those who are given support will pay more tax in the future.
Self-employed support announcement
The Chancellor announced the following measures:
- If you are eligible, there is a taxable grant available of 80% of your average trade profits based on the past three years of accounts
- If you don’t have 3 years worth of accounts it will be based on the average trading profits over the periods you do have, providing you have submitted a self assessment for the 2019 year
- To qualify, more than half of your income in these periods must come from self-employment
- The grant limit is £2,500 per month
- The grant is for three months and may be reviewed
- You must have trading profits of less than £50,000
- HMRC will use existing information to check eligibility and will invite application
If successful, you are paid a lump sum that can be backdated to March 1. You can continue to do business and still apply for the grant.
If you have yet to submit your tax return for 2019 (which was due in January this year) a four-week extension has been granted so that you are also eligible for the scheme.
What else is available?
Self-employed workers can apply for business interruption loans and are also allowed to apply to delay tax payments that are due in July.
These payments would need to be paid in January 2021, but it may provide a stopgap until then.
What can I do?
Even if your work has dried up, we advise you prepare a cashflow forecast as there may be payments for work already carried out that you’ve missed.
Chase any outstanding payments to ensure you are up to date with your invoices. If there is a problem with cashflow, then make sure you inform those you owe.
Where to get help
Clients of Concept Accountancy can contact us [Link to contact page] to discuss their situation. We are also happy to give some advice to self-employed workers who need some guidance.
Government Business Support
If you want to apply for the Government’s business support measures or want to check your eligibility you can contact them in the following ways:
Telephone: 0300 456 3565
If you need Universal Credit you can apply online on the government website.