Support for Self Employed Individuals
The government has at last announced a package of support for self-employed individuals and clarified more about how to access the Coronavirus job retention scheme
Let’s start with the Coronavirus Job Retention Scheme:
In terms of the clarified advice on the Coronavirus Job Retention Scheme, we have learnt:
You can claim for any employees who have been PAYE on your payroll including part-time or full-time employees, flexible or zero hours employees, and employees on agency contracts who are now NOT working
If the employee is currently on Statutory Sick Pay, e.g. because they are self-isolating, they are not eligible for the scheme until they have come off Statutory Sick Pay
You will get a grant for the wages you will pay out to Furloughed employees
The “up to £2500 per month” is actually “up to £2500 per month + associated Employer NI contributions, and minimum enrolment employer pension contributions on that wage”
The scheme is not yet live, but when it is we will be in contact for how you can make a claim.
Further details can be found here:
A quick summary of the grant being made available for self-employed individuals:
Self-employed individuals will be eligible of a taxable grant up to £2500 per month for at least 3 months, which will be equal to 80% of their profits. And the self-employed can carry on working to access this grant. So far so good. But with all these things there are caveats, namely:
- If you are a director of a limited business, or operate through a personal services company then this scheme does not apply to you
- You need to have a trading profit of less than £50, 000 in 2018-19 or an average trading profit of less than £50,000 from 2016/17, 2017/18 and 2018/19.
- More than half your income in these periods must come from self-employment. If you started trading between 2016 – 2019, HMRC will only use the years that you filed a self-assessment tax return
- You need to have submitted your personal tax return for 2018/19 (and if you haven’t you must do so by April 23rd 2020)
- You have been trading in 2019/2020
- You need to have lost money due to COVID-19
You may be thinking, I’m self-employed but get paid as a mixture of dividends and salary. Why can’t I access this scheme? The government may have put IR35 back for a year for the private sector, but they do seem to be making a point here!
Full details of the scheme can be found here:
How will HMRC work out what I can claim?
HMRC will take your trading profit for the last 3 years you have traded, then divide by 3 and divide by 12 to get your average monthly profit.
Example: Dave is a self-employed plumber who has been trading for 3 years. In his self-assessment tax returns he declared a profit of £48 000, £35 000 and £45 000. His average monthly profit is: (48 000 + 35 000 + 45 000)/(3*12) = £3 556. This means he would be eligible to claim for £2500 per month of grant.
Example: Sarah is a mobile hairdresser and started trading in May 2019. Her self-employed income was 20% of her income for the year, so she is not eligible for the scheme, as her trading profits in tax year 2018/2019 was not more than half of her taxable income for 2018/2019.
Example: Rishi is a taxi driver and started trading in April 2018. His trading profit in 2018/2019 was £20 500. He got all of his income from self-employment in 2018/2019. He would, therefore, be entitled to £20 500/12 = £1708.33 of a monthly grant.
How do I make a claim?
If you are eligible, HMRC will be in touch.
What help is available to me as someone who is self-employed but operates through a limited company and doesn’t have premises?
In this scenario then you may be able to access a grant via the Coronavirus Job Retention Scheme. I.e. if you pay yourself a salary through payroll, then you may be able to get 80% of this salary. However, you would need to prove you are no longer working and have Furloughed yourself to access the scheme.
Please do get in touch with us at 01252 856150 or [email protected] if you want to know what grants and financial help are available to you.
Please share this with any self-employed people that you know, even if they are not our clients, as we are more than happy to provide support to everyone that needs it.