Last week, the government finally decided to address how they plan to help self employed people financially during this crazy time. Although we would all benefit from dinner with Jay Z, here are the facts; WHAT IS IT?
The government are offering a grant worth 80% of average monthly profits over the last three years up to £2,500 a month to self employed workers
The grant will be subject to tax and because it’s a grant will not need to be paid back
HOW DO I APPLY?
HMRC will contact you directly with guidance on how to apply
You will need a valid tax return for 2019
AM I ELIGIBLE TO RECEIVE THIS GRANT?
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17
More than half of your income from prior to 2019 must come from self-employment
If you’ve recently become self employed and don’t have the April 2019 tax return, unfortunately you won’t be eligible for this grant
NB: If you missed filing deadline in Jan, you will have 4 weeks from 26.03.2020 to submit your tax return
If you own your own company and pay yourself through these wages, you can't apply for this
WHEN CAN I GET IT?
June. You will get paid in a single lump sum into your bank account covering all 3 months (March - April)
WHAT ABOUT NOW?
You are still eligible to apply for universal credit in full, which is available immediately
If you have a business bank account, you are able to take out business continuity loans. These will have to be paid back with interest.
CAN I STILL WORK AS WELL AS RECEIVE SUPPORT?
PROBLEMS WE SEE:
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 and use this to calculate a monthly amount. There is no mention of people who have not been self-employed for 3 years. People who may not accurately recorded / documented their income will be left out.
Going live by June, what do people do before then for money if they do not want to claim welfare?
What will be the future repercussions of taking this grant?
People who exceeded profits of £50,000 are expected to have savings which may not be the case.
We believe the government may use this to end NI and tax advantages for the self-employed once this year is over although there is no official policy yet.
Those who pay themselves dividends through their own company are not covered by this scheme.
by Milly Lupton & Banita Matharoo