From Monday 17th August 2020, further financial support is available for the self-employed, including partners of partnerships or LLP’s. If you were eligible for the first grant and can confirm to HM Revenue & Customs (HMRC) that your business has been adversely affected on or after 14th July 2020, you will be able to make a claim for a second and final grant from Monday 17th August 2020.

This scheme allows you to claim a second and final taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.

As with the first grant, HMRC will contact you if you are eligible and they will work out your eligibility for the second grant in the same way as the first grant.

You can make a claim for the second grant if you are eligible, even if you did not make a claim for the first grant.

If you want to claim the second and final grant you must make your claim on or before 19th October 2020.

As before, we are not able to apply on your behalf but, as always, we are still here to help you.

Action you need to take from Monday 17th August 2020

We have detailed further information below about who can claim, eligibility and how it works but the action we suggest you take 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 on or after 14th July 2020. 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
  • one or more of your contracts have been cancelled
  • you had to buy protective equipment so you could trade following social distancing rules

Further examples can been found on the HMRC website here.

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 70% 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 £6,570. 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
70% (of £10,500) = £7,350

As this is above the maximum amount payable, you will receive £6,570.

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
70% (of £10,500) = £4,200

In this example, you will receive £4,200. 

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.

Contact me today!

Jack Emerson

ACCA

Head of Compliance Services

Send me a message

Share this article