The self-employed income support scheme was one of the last grants that were announced by the HMRC.
The Chancellor confirmed that it was difficult to assess how the amount of grant that could be given to self-employed individuals in the UK due to the flexibility of their income.
Who qualifies for the Self-employed income support scheme?
To qualify for this relief, the individual or partners must:
- First, be registered for self-assessment receiving trading profit.
- They must have submitted a self-assessment return for 2018/19. For those that haven’t submitted their self-assessment returns, they have up to April 23 to ensure their returns are submitted.
- They must be trading in this current tax year and have lost income due to COVID -19.
- Their trading income must be less than £50,000 and more than half of their income would be from self-employment.
What is “Trading profit” for self-employed?
The trading profit is the amount that is derived from sales minus the purchases and other allowable expenses.
What is the grant that is available to Self-employed?
Under this scheme, HMRC would allow taxpayers to claim a grant of up to 80% of the averaged trading profit capped at £2500 for 3 months.
Illustration of the grant payable under this scheme.
The average of trading profit for 3 tax years would be used. (2016/17 ,2017/18,2018/19).
Jack, who is trading as a Plumber had the following Trading Profit:
For example when the trading profit for 2016/17 is £10,000.
The trading profit for 2017/18 is £12,000.
And the trading profit for 2018/19 is £14,000.
The average for the trading profit is £12,000.
This average profit would then be divided by 12 months -£1,000.
The grant that Jack would be receiving as a from HMRC will, therefore, be £1000 times 3 months =£3,000.
When to apply for the scheme?
The HMRC has suggested that the grant will be available by June. They would be contacting the self-employed individuals that are entitled to this grant.
A taxpayer could calculate the grant that is expected from HMRC however would not receive the grant before June.
If you would like us to support you with your Self-assessment returns or any of this claim discussed above, kindly contact us for a Free 30 minutes consultation.