Initial thoughts on the newly announced support scheme for the self employed;
- applies to sole traders and trading partnerships, where trading income is the majority of your taxable income.
- It does not appear to cover subcontractors and freelancers operating through limited companies but they can claim the CJRS on their salaries.
- applies to those with averages taxable profits of less than £50,000 for the last three tax years.
- you must still be self employed as of today, for example you should not have retired or moved to employment. Presumably this will be a self declaration?
- HMRC will contact those who can claim, there will be an online form to complete and you should receive the grant in June – it’s back dated so you should get three payments in June.
- between now and June the Chancellor said you will be able to access Universal Credit and the existing benefit systems for help with council tax and housing costs. It is not clear whether any payments will be deducted from the grant you receive in June. My guess is that it won’t be, but that is just a guess. You can also contact your landlord or mortgage provider to request a payment holiday.
- the amount you will receive will be 80% of your average declared taxable profits, capped at a grant amount of £2,500 per month. So I take that to mean it is capped at an average annual profit of £37,500.
- will be based on the average of your self employed profits as declared on your self assessment tax return for the three tax years to 2018/19.
- if you have been self employed for less than 3 years but were self employed at 5 April 2019 and have submitted a 2018/18 tax return, it will be based on your average profits for the shorter period.
- if you commenced self employment after 5 April 2019, the Chancellor said that you cannot claim. However, Robert Jenrick MP representing the Government tonight on BBC Question Time, contradicted this and said people with less than one years self employment “should give us what they have got” and we will see if the scheme can apply to them. So it is probably worth asking your accountant to prepare some accounts from the date you started self employment to 28th February 2020 and use them to negotiate a grant with HMRC.
- if you have not yet filed your 2018/19 tax return you have until 23 April to do.
The second self assessment tax instalment payable on 31st July 2020 is deferred to 31st January 2021 if you are self employed.
In addition to the above sole traders and partnerships can also benefit from the business rates holidays, business rates related grants, VAT deferral, tax time to pay, the CJR scheme and SSP recovery for their employees as appropriate to their individual business.
This briefing is for guidance purposes only. Mackenzies Accountants Ltd and the author accept no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommend that appropriate professional advice be taken having regard to your own particular circumstances.
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