What is Self Employment Income Support Scheme?
Self-Employment Income Support Scheme is for the self-employed or member of a partnership who has been affected negatively by the coronavirus (COVID-19).
Under this scheme, you can claim a taxable grant of 80% of your monthly trading profits which is paid out in a single installment covering 3 months.
Please note that it is a temporary scheme which is capped at £7,500 and may be extended in future.
Also, the grant will be subject to income tax and self-employed National Insurance.
You can start a new trade, can continue to work, take on other any other employment, including any voluntary work, or perform duties as an armed force reservist if you receive this grant.
It is up to HMRC to decide the amount of grant you will receive and whether yo are eligible for it in the first place.
What is the eligibility criteria?
Any self-employed individual or a member of partnership can make a claim provided they fulfill the following criteria:
- traded in the tax year 2019 to 2020
- intends to continue to trade in the tax year 2020 to 2021
- carries out a trade that has been negatively impacted by coronavirus
- traded in the tax year 2018 to 2019 and submitted Self Assessment Tax Return on or before 23 April 2020 for the year
- has trading profits of no more than £50,000 per year
- earned at least half of their income through self-employment
How is a business said to be negatively impacted by coronavirus?
A business is said to be negatively impacted by coronavirus if it is unable to function as a result of inability to work due to:
- sick leave
- caring responsibilities
It is also said to be an affectee of coronavirus if it has had to either scale down or stop trading temporarily because of
- disruptions in supply chain
- staff absences
- lesser number of customers or clients
Do different circumstances affect my eligibility for the scheme?
Yes. Different circumstances affect your eligibility or the scheme differently.
Below we mention some of these circumstances:
- If you are a non-resident or choose the remittances basis
- If you claim averaging relief
- If you are above the state aid limits
- If you are a member of a partnership
- If your return is late, amended or under enquiry
- If you are on or took a parental leave
- If you have loans covered by the loan charge
Find out how these circumstances affect your eligibility for the scheme here
How can you make a claim?
The online service goes live on 13 May 2020 and is being launched ahead of the original timeline.
This will help millions of self employed, covering a wide range of industries and jobs, whose livelihoods have been negatively impacted by COVID-19.
The claims will be very simple and those eligible will have the money paid into their bank account by 25 My 2020.
You will receive your payment within six working days in the event of your claim being approved.
Please also beware of any emails, texts or calls claiming to be from HMRC asking you to click on any link or soliciting your personal information.
All such communication offering tax refund or financial are a scam, must be emailed to firstname.lastname@example.org and be immediately deleted.
What do I need to make a claim?
You will need the following items to make a claim:
- bank account number and sort code you want the HMRC to pay the grant into (please provide bank account details where a Bacs payment can be expected)
- Government Gateway user ID and password (you can create one here or recover here when checking your eligibility online if you do not already have a user ID)
- National Insurance number (you can find your lost National Insurance Number here)
- Self-Assessment UTR (you can find your lost UTR number here)
How much grant can you expect?
The taxable grant will be based on your average trading profit over the previous three tax years
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
The HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years and dividing it by 3.
It will then pay the grant amount directly into our bank account in one installment.
Read this guide here if you wish to know how HMRC will calculate your average trading profits.
What happens once I have made my claim?
As soon as you submit your claim, you will be informed straight away if your grant is approved.
In the event of your claim being approved, HMRC will pay the grant into your bank account within 6 working days.
However, you must keep a copy of all records in line with normal self-employment record keeping requirements, including:
- the claim reference for your records
- the amount claimed
- proof that your business has been negatively impacted by coronavirus
Additionally, you will have to report the grant
- as self-employed income and that you are working 16 hours a week for any tax credits claims
- on you self Assessment Tax return
- as self-employed income for any Universal Credit claims
Is there any other financial support available?
As you wait for the grant, you can make a claim for Universal Credit. While this grant may affect the amount of Universal Credit you get, but will not affect claims for earlier periods.
The following assistance is also available for the self-employed by the government:
- Bounce Back Loans
- Business Interruption Loan Scheme
- grants for businesses that pay little or no business rates
- deferral of Self-Assessment Income Tax and VAT payments
Also, your employed may be able to get support using the Coronavirus Job Retention Scheme if you have other employment as an employee paid through PAYE or a director.
Get in Touch
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Lanop Accountants and Tax Advisers for Small and Medium Businesses
We are your local Chartered Accountants and Tax Advisers based in Putney, Harley Street and Battersea. We are expert XERO Accounting advisors and trusted business advisors in Wandsworth Borough.
While we are based in South West London and Central London, our clientele is quite global and our staff is currently working remotely to serve our clients through active Zoom accounts all over UK.
As always, you can reach out to us anytime to discuss any financial issues you may have in this coronavirus pandemic.