Coronavirus and the Self Employed

The Government has finally published guidance for the self-employed.

The guidance is very comprehensive and set out in the attached link.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

The guidance sets out a grant of 80% of trading profits over years 2016/17, 2017/18 and 2018/19 or £2,500 maximum adopting similar numbers set out in earlier guidance for employers and employees.

The criteria require the claimant to have filed a tax return for 2018/19 0r will have done by no later than 23 April 2020. Returns would ordinarily have been filed on 31 January 2020. The claimant must also be trading in 2019/20 but for Coronavirus.

Where bank details are known payments will be made directly into the claimants bank.

The grant does not apply if income exceeds £50,000, and crucially self-employed income must be more than 50% of the individual’s income (many individuals have more than one occupation and many are both employed and self-employed concurrently).

The scheme does not tell individuals when to apply but assures the taxpayers that once a claim is made, HMRC will contact individuals if they are eligible.

Added to the deferral of VAT, cancellation of business rates and the second instalment of tax for 2019/20 due on 31 July 2020, this package is substantial.

However, a number of issues remain unanswered;

1. The timing of a claim and of payments

2. Newly self-employed people

3. The definition of profits (many individuals claim various legitimate expenses against profits such that profits are lower than the “actual drawings” enjoyed from the business from previous year retained profits (which rarely are in a cash form representing the tools of the self-employed persons trade)

In case of any questions please contact at Chris.Cummings@ase-global.com 
Tel: +44 (0)161 493 1930