Morgan Hemp & Co - Tax Tips & News

GUIDANCE FOR OUR CLIENTS - CORONAVIRUS (COVID-19)
UPDATE 2: The Self Employed - 27th MARCH 2020

As expected yesterday the chancellor announced major support for the self-employed (including partners in a trading partnership).

The scheme will allow the self-employed to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months.

(Please note - Those who pay themselves a salary and dividends through their own company are not covered by the scheme but may be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes).

The monthly amount will be calculated using 80% of the average trading income over the last three years (2016 to 2017, 2017 to 2018, 2018 to 2019). If the trade commenced during these 3 tax years, the average over the period of trade will be used. Individuals whose trade commenced after the 5th April 2019 will not be eligible for the scheme.

To claim the grant the following conditions apply:

Your 2018/2019 tax return must have been submitted.
You traded in the 2019/2020 tax year.
You are trading when you apply (or would be except for COVID-19).
You intend to continue to trade in the 2020/2021 tax year.
More than 50% of your income is derived from self-employment.
Your trade has suffered as a result of COVID-19 i.e. you have lost income and/or incurred additional costs as a result of COVID-19.

In addition to the above conditions, those with trading profits above £50,000 per year will be excluded from the scheme. The £50,000 threshold applies if both of the two following conditions are met:

Profits in the 2018/2019 tax year are more than £50,000.
Average trading profits in the last 3 tax years are more than £50,000.

Please note the grant is considered taxable income so should form part of your normal tax payment cash flow planning.

The grants are expected to be paid in early June ’20, the scheme cannot yet be applied for. HMRC will contact the relevant individuals and invite them to apply for the grant online. HMRC will pay a single lump sum directly into the individuals bank account.

Before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account.

Full details of the scheme are not yet available, we will continue to communicate updates as and when they become available to us.

Please do not hesitate to contact us if you wish to discuss the above or how COVID-19 is affecting your business generally.

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Disclaimer
The information contained in this newsletter is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.