Pandemic: Self employed get much needed help!

The criteria to gain eligibility to the scheme includes: –

1. You must earn more than 50% of your income from self-employment.
2. Must already be registered as self-employed for the 2018/19 tax year.
3. Have submitted a tax return for 2018/19 (if you have not submitted one then you have four weeks from today to file one).
4. Have a trading profit of: –

• Less than £50,000 for 2018/19; or
• Less than £50,000, on average, for the tax years 2016/17, 2017/18 and 2018/19.

Meeting these criteria will qualify you for a grant for 80 percent of your monthly profits, up to £2,500 a month for three months. Please note that the grant will be taxable and must be declared on your self-assessment tax return.

You will get a lump sum payment and it is hoped these will start at the beginning of June and will be backdated to the start of March and cover a three-month period to the end of May. The government has said the scheme might be extended in the future.

HMRC will calculate your grant by using your average trading profits from 2016/17, 2017/18 and 2018/.

This scheme is open to sole traders and members of partnerships but not to owners/directors of a limited company who pay themselves salary and dividends through that vehicle.

If you pay yourself a salary and dividends through a company, you will not be eligible, but might be helped by the coronavirus job retention scheme if you’re earning through PAYE.

How To Make A Claim?

You do NOT need to make a claim for the grant. HMRC will check eligibility against existing information and will contact you about making an online application. It is unclear when this process will start.

Universal Credit

Given that the first payments from the Coronavirus Self-Employed Income Support Scheme are not expected until June, then self-employed people will need to access other funding as soon as possible.

One method is to claim Universal Credit which can be claimed as long if you pass the eligibility criteria that your partner or spouse (if you live as a couple) have savings of less than £16,000.

The self-employed have always been able to claim Universal Credit if their earnings take a dip. Before the outbreak took hold, the current Universal Credit rates were: –

The actual amount the self-employed person can claim will be tapered by the amount of savings.

The government has announced the standard allowance will be increased by up to £86.67 a month from 6 April 2020, plus the self-employed person may be able to claim elements for other costs, such as housing, caring responsibilities or bringing up children.

From 6^th April 2020, the minimum income will be temporarily abolished meaning that there will be an increase in the amount of Universal Credit that the self-employed person can make.

If the self-employed person or their partner or spouse are already getting any of the benefits being replaced by Universal Credit, including Tax Credits, Housing Benefit or Income Support, these benefits will stop and self-employed person’s benefit for these costs will be reassessed as part of the Universal Credit claim.

How To Make A Claim?

The process to make a claim will take the following format: –

1. The claimant must create an online account and then make a claim within 28 days of creating that account. You will need:
   • your bank, building society or credit union account details (call the Universal Credit helpline if you do not have one).
   • an email address.
   • information about your housing.
   • Prove that you are self-employed such as your UTR number, accounts and tax return.
   • details of savings and any investments, like shares or a property that you rent out.
   • details of how much you pay for childcare if you’re applying for help with childcare costs/

        If you do not provide the right information when you apply it might affect when you get paid or how much you get.

       The claimant will also have to verify your identity online. You’ll need some proof of identity for this such as a driving licence, passport or debit card.

       The claimant will need to attend an interview with a work coach. Normally this takes place at the local job centre. During the outbreak, this will be conducted by telephone call.

3. The claimant can also make a claim for an advance payment while waiting for the Universal Credit payment. The work coach should be able to provide advice on the matter. Be aware that the advance payment will need to paid back out of future Universal Credit payments.

4. The first payment will be made. It is expected that the first payment will be made five weeks after the claim has been made.

Employment and Support Allowance

If the self-employed person cannot work because they are sick or have to self-isolate because of coronavirus, then they can claim the Employment and Support Allowance.

To make the claim, the claimant will need to complete the Form ESA 1 and send it, together with a fit note from NHS 111, to show that the claimant is not fit for work.

The claimant should be paid from the first day of the claim and should be paid to the claimant within three weeks.

Local accountants and tax adviser, Trueman Brown, deliver vital services to small business. If you require any further assistance, then please do not hesitate to contact us.