THIS SUMMARY IS SUBJECT TO CHANGE AT SHORT NOTICE AS THE GOVERNMENT RELEASES ITS OWN UPDATES – THIS SUMMARY WAS LAST UPDATED FRIDAY 27th MARCH 2020 @ 10.08am

On Thursday 26 March the government announced their intention to provide support for the self-employed and members of a partnership who have lost income due to coronavirus. The support is in the form of a taxable cash grant.

The scheme allows individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

The taxable cash grant will be in the form of a single lump sum to cover the next three months. The grant will be paid directly into the individual’s bank account.

The self-employed, including members of partnerships, will be eligible if their trading profits for 2018/19 were less than £50,000 and more than 50% of their income arises from self-employment.

Alternatively, they will be eligible if their average trading profits for the tax years 2016/17, 2017/18 and 2018/19 were less than £50,000 and more than 50% of their income arises from self-employment. For those that started trading between 2016 and 2019 HMRC will only use those years for which a Self-Assessment tax return has been filed.

The scheme will be open to those that have submitted an income tax self-assessment tax return for the year to 5 April 2019 (the 2018/19 tax year). HMRC’s guidance states that the 2018/19 tax return must be filed by 23 April 2020. Those that have yet to file their 2018/19 tax return should ensure that they file by 23 April 2020 in order to be eligible for the grant.

Additional eligibility criteria include the requirement that the individual must have lost trading profits due to Covid-19, they must have traded in 2019/2020, they must be trading at the point of application (or would have been except for Covid-19) and they intend to continue to trade in 2020/2021.

Individuals that claim Tax Credits would need to include the grant as part of their income.

Only trading income of self-employed individuals is expected to be eligible for support. It will therefore not apply to property, dividend or non-trading income.

HMRC will contact those that are eligible and will invite them to apply. Applications will need to be made online.

Individuals do not need to contact HMRC now.

Unfortunately, those who have recently become self employed during the 2019/20 tax year will not be eligible for the scheme at present.