HMRC have done a great job of putting together a self employed income support scheme in a very short space of time. Nothing’s perfect and there are still some groups of people that are not included, but we’ve got something to work with now.
We are going to need patience
Many of us are very concerned about our financial situation during this time of government restrictions. And rightly so. We all have bills still coming out, even if we’ve suddenly got nothing coming in. Self employed taxpayers are in a more complicated and precarious situation than their PAYE counterparts. The path to support is more complex, as HMRC attempt to work out a system that encompasses the diverse nature of our economic landscape. This makes accessing help a bit trickier.
How much support can I get?
If you meet the eligibility criteria, you can claim a taxable grant that equals 80% of your profits for the next three months. This is capped at a value of £2,500 per month.
The government have left the end point of the scheme open, it can be extended if circumstances dictate that this is necessary.
HMRC will calculate your average profits over the last three tax years. To do this, they will use the information from your self assessment tax returns. They will add together your profits for 2016-17, 2017-18 and 2018-19 and divide it by three, to get an average figure.
You will then receive 80% of that amount as a lump sum, directly into your bank account.
Who is eligible for the self employed income support scheme?
This scheme is for self employed individuals and those operating a business partnership.
The eligibility criteria are:
- You 2018-19 self assessment tax return has been submitted
- You traded in the 2019-20 tax year and plan to carry on trading in 2020-21
- Your profits are down because of COVID-19 restrictions
- As you submit your application, you are trading. Or you would be trading, if you weren’t following government guidance on COVID-19 (stay inside, apart from essentials).
You must make more than half of your income from self employed work and your trading profits from this self employment must be under £50,000. HMRC will see the proof of this position in one of two ways:
- An average of your 2016-17, 2017-18 and 2018-19 profits is under £50,000 and is more than half your “total taxable income”.
- Your 2018-19 profits make up more than half your total taxable income and are no more than £50,000.
I haven’t filed my 2018-19 self assessment tax return yet…
Do not put this off any longer. HMRC have said they will still consider your application for help if you get this tax return to them by 23rd April 2020. You do not have any time to waste. Just get it done. Your accountant or tax agent will still be able to help you over the phone, as long as they are well and still working.
How to apply
Right now, you shouldn’t do anything. The scheme is not up and running yet. Phoning for information specifically about this scheme will be fruitless and just takes time away from HMRC’s preparations. Basically, you’ll just hold things up.
HMRC will work out if you are eligible and get in touch with you. This will be an invitation to apply online, through GOV.UK and then they will process your application and get the money to you.
Watch out for scams
Any texts, phone messages or emails asking you to give personal and bank details, or click on a link to get any kind of money from HMRC, it is a scam. To avoid being ripped off, do not click on any link, phone any interlinked number or open any attachment. Forward the message to Action Fraud and delete it.
Can I get any other help as a self employed taxpayer?
The government have a list of different ways to access help as a self employed person on their dedicated web page. So if this scheme doesn’t apply to your situation, perhaps you will find something to help you in this list:
- “deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- grants for businesses that pay little or no business rates
- increased amounts of Universal Credit
- Business Interruption Loan Scheme”
Let’s be thoughtful
HMRC is a government department, but it’s made up of ordinary people. It is very important to remember that the people we need to help us, are in the same boat we are. They’re worried about all the potential consequences of Covid-19, just like you are. They may be employed and have some financial security, but that doesn’t mean their partner hasn’t suddenly lost their job. It doesn’t mean that they’re not scared of catching the virus because they’re still coming in to work to help us.
This is a time to relate to each other as human beings. If we’re asking for help, the least we can do is maintain our manners, regardless of how we are feeling.
No one knows what they’re doing. Everyone’s reacting to something they’ve not prepared for. Most of us are just trying our best. That includes you and how you’re helping your customers and clients. And it includes HMRC staff. Let’s be kind.