In our blog on 26th March 2020 we told you about the financial support announced to help the self-employed, including partners or partnerships or LLP’s. Further details have now been released about the Self-Employed Income Support Scheme and when the grant will be paid out. 

The online service will be available from 13th May 2020 and if you are eligible, HM Revenue & Customs (HMRC) will tell you the date you can make your claim from (this has been allocated randomly between 13th and 18th May). If your claim is approved, you will receive your payment into your nominated bank account within 6 working days. 

We are not able to apply on your behalf. HMRC have explained that a system to enable this would have taken longer to deliver, at a time when speed is the priority. As always, we are still here to help you.  

Action you need to take now

We have detailed further information below about who can claim, eligibility and how it works but action we suggest you take now in preparation for submitting a claim for this grant is as follows:

1. Find your 10-digit Unique Tax Reference (UTR) AND your National Insurance Number

You can find both of these on the first page of your 2018 to 2019 tax return. If you use the A4G client portal, you can login and access a copy of your tax return.

2. Have to hand your passport or driving licence.

These will be needed if you are required to verify your identity when logging into the Government Gateway (an alternative method of verification is available if you have neither of these documents)

3. Use the HMRC online tool to check if you are eligible:

  1. Go to the HMRC online tool
  2. Enter your UTR and select ‘continue’
  3. Enter your National Insurance Number and select ‘continue’
  4. Review the HMRC message stating whether you are eligible or not. If it says you are not eligible and you think this is incorrect, there is an option to ask HMRC to conduct a review. 

Should you wish for us to review your eligibility, please contact us.

4. If you already have a Government Gateway login, please ensure your contact details are correct:

  1. Select ‘continue’
  2. Select ‘sign in and add your contact details’
  3. Enter your Government Gateway user ID and Password and select ‘Sign in’
  4. Enter the access code received to your mobile or email address and select ‘Continue’
  5. If you are asked to verify your identify, follow the instructions on screen
  6. f. Update your contact details – Enter your email address and telephone number and select ‘Continue’
  7. Check your contact details are correct and select ‘Submit’
  8. A message will appear saying ‘What happens next’ – take note of the date from which you can make a claim

5. Or, if you do not have a Government Gateway login, follow the instructions on screen to create one:  

  1. Select ‘create them now’
  2. You will then need to enter your email address to which you will receive a code
  3. Enter the code and follow the onscreen instructions to create your account – ensure you keep your Government Gateway ID is a safe place
  4. Once signed in, enter your contact details including email address and telephone number
  5. Check your details are correct and select ‘Submit’
  6. A message will appear saying ‘What happens next’ – take note of the date from which you can make a claim

Submitting a claim

To submit your claim, you should log in to the Government Gateway on the date advised by HMRC (as identified in your preparation above). They will use the contact details you provided to remind you. To submit the claim, you will need:

  1. Your UTR and National Insurance Number (Again, you can find these on your tax return by logging into the A4G client portal)
  2. Your Government Gateway ID and password
  3. Your bank account number and sort code you want HMRC to pay the grant into 
  4. You will need to confirm to HMRC that your business has been adversely affected by coronavirus

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep in your records:

  1. The amount claimed
  2. The claim reference number
  3. Evidence that your business has been adversely affected by coronavirus, such as correspondence showing work has been cancelled or postponed

You will need to report the grant:

  • On your Self Assessment tax return
  • As self-employed income for any Universal Credit claims
  • As self-employed income and that you’re working 16 hours a week for any tax credits claims

Who can claim

You can claim if you’re a self-employed individual or a member of a partnership and:

1. You traded in the tax year 6th April 2018 to 5th April 2019 and submitted your Self Assessment tax return on or before 23rd April 2020 for that year;

2. You traded in the tax year 6th April 2019 to 5th April 2020;

3. You intend to continue to trade in the tax year 6th 2020 to 5th April 2021; and

4. You carry on a trade which has been adversely affected by coronavirus, for example, you are unable to work because you:

  • are shielding
  • are self-isolating
  • are on sick leave because of coronavirus
  • have caring responsibilities because of coronavirus

Or, you have had to scale down or temporarily stop trading because:

  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work

Eligibility

HMRC will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits/partnership profit shares must be:

1. No more than £50,000; and

2. make up at least 50% of your income

If you are not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then also look at your 2016 to 2017 and 2017 to 2018 Self Assessment tax returns.

How much you can claim

If HMRC have confirmed you are eligible for the grant, the amount you can claim will be 80% of 3 months of your average trading profits over the 3 tax years (2018 to 2019, 2017 to 2018 and 2016 to 2017) up to a maximum total of £7,500. For example, if your average trading profit was £42,000:

Average trading profit = £42,000
Divide by 12  = £3,500
Multiply by 3  = £10,500
80% (of £10,500) = £8,400

As this is above the maximum amount payable, you will receive £7,500.

Alternatively, if your average profit was £24,000, the calculation would be as follows:

Average trading profit = £24,000
Divide by 12  = £2,000
Multiply by 3  = £6,000
80% (of £10,500) = £4,800

In this example, you will receive £4,800. 

Please remember that this grant is taxable income and will be assessed on your tax return for 6th April 2020 to 5th April 2021.

We will update this guidance as and when HMRC release further information.

Newsflash: Furlough update 

Today Rishi Sunak’s announced that the Furlough arrangement and grants will be extended to October 2020.

Sunak said there would be no changes in the system, whereby the government pays 80% of furloughed workers’ wages up to £2,500 per month, until the end of July. From August, the scheme will continue for all sectors and regions, but with greater flexibility for firms to bring staff back to work. Under the current scheme furloughed employees cannot work.

However, from August, there was an indication that during this extended period although employees are still entitled to 80% of salary, employers will not be able to get a grant for the full amount.

We are awaiting guidance on when the reduced grants will apply from and how much of a reduction they will be. Either way employers will need to start planning how to bring workers back from furlough or face some costly decisions. On Thursday we will be sharing some of our tips and thoughts about staffing and getting back to business.

Contact me today!

Jack Emerson

ACCA

Head of Compliance Services

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