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Coronavirus Financial Support for Self Employed

On 26 March the UK Government announced financial support for individuals who are self-employed and have been negatively affected by COVID-19.

Self-Employed Income Support Scheme

The scheme has been extended to provide two more grants between November 2020 and April 2021.

Scheme Extension

To be eligible for the grant extension self-employed individuals, including members of partnerships, must:

  • currently be eligible for the Self-Employment Income Support Scheme (although they do not have to have claimed the previous grants)
  • declare that they are currently actively trading and intend to continue to trade
  • declare that they are impacted by reduced demand due to coronavirus in the qualifying period (the qualifying period for the grant extension is between 1 November and the date of claim)
  • It will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020.

The extension will provide two grants and will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.

The Self Employment Income Support Scheme will provide self-employed individuals or members of partnerships with a taxable grant. The fifth grant will differ from previous grants.

To be eligible for the scheme you need to meet the following criteria:

  • traded in 2020/21
  • traded in 2019/20
  • have lost trading profits due to COVID-19
  • trading profits are less than £50,000 and more than half your income comes from self-employment*

*This is determined by at least one of the following conditions being true:

  • Your trading profits and total income in 2018/19
  • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

Applications for the fifth grant will open at the end of July 2021. 

How the fifth grant is different

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

HMRC will provide more information and support from early July 2021 to help you work out how your turnover was affected.

How much you’ll get

Turnover reduction How much you’ll get Maximum grant
30% or more 80% of 3 months’ average trading profits £7,500
less than 30% 30% of 3 months’ average trading profits £2,850

Universal Credit

You may be eligible for Universal Credit while you wait for the grant, but the grant will be considered as self-employed income and may affect the amount of Universal Credit you will get. Any Universal Credit claims for earlier periods will not be affected. 

Trading profits

This is shown on your tax calculation as either profits from:

  • self-employment
  • partnerships

HMRC will work out your total trading profit after deducting any allowable expenses such as:

  • expenses
  • capital allowances
  • flat rate expenses

If your annual gross trading income, from one or more trades or businesses is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances.

HMRC will work out your share of the partnership’s trading profits by taking all partnership income, and then deduct anything that is non-trading income, such as investment income.

They will not deduct from your trading profits:

  • any losses brought forward from previous years
  • your personal allowance

Non-trading income

This is the amount recorded as ‘total income received’ on your online or paper tax calculation, less your trading income.

HMRC will work out your non-trading income by adding together all your:

  • income from earnings
  • property income
  • dividends
  • savings income
  • pension income
  • overseas income
  • miscellaneous income (including taxable social security income)

How to Claim

Check your eligibility

To check your eligibility you will need your:

  • Self Assessment Unique Taxpayer Reference (UTR) number 
  • National Insurance number 

Make a Claim

To make a claim you will need your:

  • Self Assessment UTR - if you do not have this find out how to get your lost UTR
  • National Insurance number - if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password - if you do not have a user ID, you can create one when you check your eligibility online
  • bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by Coronavirus on or after 14 July 2020. Find examples of how your business could have been adversely affected.

After you Claim

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:

  • the amount claimed
  • the claim reference number for your records
  • evidence that your business has been adversely affected by coronavirus

You will need to report the grant:

  • on your Self Assessment tax return
  • as self-employed income for any Universal Credit claims
  • as self-employed income and that you’re working 16 hours a week for any tax credits claims

How different circumstances affect the Self-Employment Income Support Scheme

If you're self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.

Pay the Grant Back

You must tell HMRC if you think you:

  • have been overpaid
  • should not have claimed the grant (because you weren't eligible or made the claim in error)

You should tell HMRC as soon as possible if you know you’ve been overpaid or are not eligible for the grant. You may have to pay a penalty if you do not tell them.

Tell HMRC if you need to pay money back

Self Employed New Parents

Self-employed parents whose trading profits dipped in 2018/19 because they took time out to have children will be able to claim for a payment under the Self-Employed Income Support Scheme (SEISS).

The scheme requires claimants to have traded in 2018/19 with their profits making up at least half of their total income. They must also have submitted a self-assessment tax return on or before 23 April 2020 for the 2018/19 tax year.

The government has ensured parents, including mothers, fathers and those who have adopted, who took time out of trading to care for their children within the first 12 months of birth of the child or within 12 months of an adoption placement, will now be able to use either their 2017-18 or both their 2016-17 and 2017-18 self-assessment returns as the basis for their eligibility for the SEISS.

They will also need to meet the other standard eligibility criteria for support under the SEISS.

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

  • affected the trading profits or total income you reported for the tax year 2018 to 2019
  • meant you did not submit a Self Assessment tax return for the tax year 2018 to 2019

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

  • being pregnant
  • giving birth (including a stillbirth after more than 24 weeks of pregnancy) and the 26 weeks after giving birth
  • caring for a child within 12 months of birth if you have parental responsibility
  • caring for a child within 12 months of adoption placement

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’ll need to confirm to HMRC that being a new parent affected your trading profits or total income in the tax year 2018 to 2019, and provide supporting evidence. You’ll be able to do this for the first and second grant using an online form in August 2020.

You'll be asked to provide information such as:

  • Child Benefit reference number
  • birth or adoption certificate number
  • Maternity Allowance reference

Coronavirus Business Advice and Support

The AND business team is here to support you.

For further information or if you need help and advice, please get in touch via email or telephone 028 9147 3788