The government has announced further help, this time for self-employed people (sole traders and partnerships)
The government will make a taxable grant of 80% of your average trading profits, up to £2,500.
This will be calculated on the average of your trading profits over the following tax years.
You do not have to have traded for all three years, your average would simply be calculated on the lesser number of years.
If eligible (and you applied) then you would be paid the grant in one instalment in June by bank transfer.
- Your trading profits are under £50,000
- Over half your income must be from self-employment (or your partnership)
- You were trading in 2019/20
- You intend to continue trading in 2020/21
- You are currently trading or would expect to be if it were not for Covid-19
- You have lost trading profits due to Covid-19
- You have filed your 2018/19 tax return (if you have not, you have a 4 week period from now to get it filed)
- If you are eligible then HMRC will invite you to apply online.
You cannot apply for this yourself initially. HMRC will contact you if you are eligible. You would then complete a form on the gov.uk website.
If you are asked to apply through any other website, it is a scam.
The grant is taxable. You can continue to trade. You must also include it in any relevant tax credits claim.
Who it won’t help
- Company directors (the government suggestion is, if directors are on PAYE, that they may be eligible for the Corona Job Retention Scheme that is open to employees)
- Self-employed people with profits over £50k in 2018-19 or over an average of £50k profits in the three qualifying years, 2016/17, 2017/18 and 2018/19
- Newly self-employed people who don’t have a 2018-19 tax return for self-employment
It unfortunately won’t cover any business fixed costs that cannot be cancelled or curtailed or otherwise reduced.
The self-employed can access Universal Credit between now and when the grants are paid in June as well as the Business Interruption Loan Scheme which are interest-free for the first 12 months.
Links to Government Guidance