Help and support for the self employed during Covid 19

Top Tip:

The scheme will initially cover the three-month period to May 2020, although it may be extended. Unlike the Job Retention Scheme for furloughed employees, the recipients of the Income Support Grant Scheme can continue their normal trading activity & retain their entitlement to the grant.

The scheme is open for self-employed individuals, and members of partnerships, who meet the following conditions:

• Trading profits of less than £50,000 in 2018/19 or an average trading profit of less than £50,000 from 2016/17, 2017/18 and 2018/19 tax years;
• More than half of their income in these periods must come from self-employment;
• They must have traded in the 2019/20 tax year, are continuing to trade when they apply for the scheme (or would be except for COVID-19), intend to continue to trade in the 2020/21 tax year and they have lost trading profits due to COVID-19; and
• They have submitted an Income Self-Assessment Tax Return for 2018/19 tax year. Individuals who did not submit their 2018/19 Self-Assessment Tax Return by 31 January 2020 filing deadline, now have a four-week extension period (that is up to 23 April 2020) to submit their Self-Assessment Tax Return and bring their records up to date.

Individuals who pay themselves a salary and dividends through their own company are not covered by this scheme but will be covered for their salary by the Coronavirus Job Retention Scheme, if they are operating a PAYE scheme.

Access to the scheme will start from the beginning of June 2020 and payments will be back dated from March 2020.  HMRC will contact eligible candidates to complete a required form and the grant will be paid directly into their bank account in a single lump sum instalment covering the three-month period March, April and May 2020.

Self-employed taxpayers are reminded, prior to grant payments becoming payable, they will still be able to access other available Government support for those affected by the Coronavirus including more generous Universal Credit and Business Continuity Loans where they have a business Bank account.

Any payments on account towards Income Tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, have been deferred until the end of January 2021.  This is an automatic process and does not need to be applied for. In addition, the Government has enhanced the HMRC’s ‘Time to Pay’ arrangement scheme to help those with upcoming tax bills plan how they can pay with an individual plan.

If your business is VAT registered, the VAT becoming due between 20th March 2020 and 30th June 2020 will be automatically deferred so that the payment won’t be due until 31st March 2021, though you can still pay if you wish. The deadline for submitting the VAT returns has not changed, i.e. it is one month and seven days after the end of the VAT period.

If you are paying HMRC by direct debit and do not want to pay the VAT until next year, you will need to cancel the direct debit or HMRC will take the payment if VAT is due. Please ensure you cancel it in sufficient time so HMRC does not attempt to automatically collect on receipt of your VAT return.

As the Covid 19 situation continues to develop and change on a daily basis, we expect further announcements and developments in the coming days and weeks.

The advice in this column is specific to the facts surrounding the questions posed.  Neither FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.