Self-Employed

Income Tax Payments

For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021. This is an automatic offer with no applications required and open not only to the self-employed but all individual self-assessment taxpayers.  No penalties or interest for late payment will be charged in the deferral period.

An increase to the Universal Credit standard allowance by £1,000 a year for the next 12 months.

The Working Tax Credit basic element is also increasing by the same amount. Self-employed people will be able to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.

Self Employed Income Support Scheme

The Government has further extended the Self Employed Income Support Scheme. The extension will see the addition of two further grants available which should help provide critical support to the self-employed.

Each grant will be available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021 and will be paid in a lump sum instalment.

The first grant will be a taxable grant covering 80% of average monthly trading profits paid out in a single instalment covering 3 months’ worth of profits and capped at £7,500 in total.

The Government are providing broadly the same level of support for the self-employed as is being provided for employees through the Job Support scheme.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

In order to claim the grant extension, you must have been eligible for the Self-Employment Income Support Scheme first and second grant (even if you did not claim them).

You must also declare that you intend to continue to trade and either:

Our guidance will be updated for these changes once we receive details from HMRC

The scheme allowed you to make the first claim for a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.

The second and final grant was available to claimed from 17 August 2020.  The scheme is now closed to new claims for the first and second grants.

HMRC will work out your eligibility for the second grant in the same way as the first grant. To make a claim for the second grant you have to confirm your business has been adversely affected on or after 14 July 2020.

This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

You could claim for the second and final grant even if you did not make a claim for the first grant.  The second grant must have been claimed on or before 19 October 2020.

If having a new child affected the trading profits you reported for the tax year 2018 to 2019

If you’re self-employed and had a new child, you may still be able to make a claim.

If you’re already eligible for the grant based on your 2016 to 2017, 2017 to 2018 and 2018 to 2019 Self Assessment tax returns, how HMRC work out your grant amount will not be affected.

You may be able to make a claim if having a new child either:

For this scheme having a new child is any of the following:

You must have been self-employed in the tax year 2017 to 2018 and have submitted your Self Assessment tax return for that year.

You must also meet all other eligibility criteria.

HMRC will work out your eligibility and average trading profits based on your Self Assessment tax returns for either the:

Ask HMRC to verify you had a new child which affected your eligibility and we will contact you if your information has been verified.

Who can apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

Your business could be adversely affected by coronavirus, for example if:

You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.

To work out your eligibility HMRC will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.

Find out how HMRC will work out your eligibility including if HMRC have to use other years.

Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.

Your tax agent or adviser cannot make the claim for you. You must make the claim yourself. If you use an agent you should contact them if you need any help or support.

How different circumstances affect the scheme

Check if your circumstances affect your eligibility, for the following:

Check if you’re eligible to claim

You can use HMRC's online tool to find out if you’re eligible to make a claim. Your tax agent or adviser can also use the online tool on your behalf.

You’ll need your:

Online services may be slow during busy times. Check if there are any problems with this service.

If you’re eligible

HMRC will tell the date you’ll be able to make a claim from and ask you to add your contact details. HMRC will use these to remind you when the online service will be available.

If you’re not eligible

If HMRC told you that you’re not eligible to make a claim, you can ask HMRC to review this after you’ve used the online tool. If you want to do this at a later time, you’ll be able to use the online tool more than once.

How much you’ll get

The second taxable grant which will be 70% of the average profits from the tax years (where applicable):

HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then HMRC will divide by 3.

The second grant will be 70% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £6,570 altogether. The online service will tell you how HMRC have worked the grant out.

The grant amount HMRC work out for you will be paid directly into your bank account, in one instalment.

HMRC has answered various questions on how they will calculate your average profits if you have not traded for all 3 years here

How to apply

The online service is now available if you’re eligible and you can claim using the GOV.UK online service. The first payment under the scheme should have been made by early June 2020 if your claim was approved.  If you want to claim the second and final grant you must make your claim on or before 19 October 2020

If you’re unable to claim online an alternative way to claim will be available.

You do not need to contact HMRC now, as this will only delay the urgent work being undertaken to introduce the scheme.

If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to phishing@hmrc.gov.uk and then delete it.

When you make your claim

You’ll only need your:

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.

If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits.

HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

After you’ve claimed

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

You will need to report the grant:

The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes.

The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance from the day you receive it.

Other help you can get

You can make a claim for Universal Credit while you wait for the grant. The grant may affect the amount of Universal Credit you get, but will not affect claims for earlier periods.

The government is also providing the following help for the self-employed:

If you have other employment as a director or employee paid through PAYE your employer may be able to get support using the Coronavirus Job Retention Scheme.

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