Here's a summary of the Scheme from Scholes Chartered Accountants.
The Government has added further clarity on the eligibility requirements in recent days, apparently "tightening" the rules to try to exclude taxpayers who:
- had already ceased to trade before the outbreak began;
- have not lost profits as a result of Covid 19; or
- do not intend to continue trading in the tax year 2020/21.
This is what we know as of 8 April 2020:
- A taxable grant of 80% of "average monthly profits" arising over the last three years;
- Where there are less than three years' accounts, profits will be averaged over the shorter period;
- Those who only started self employment after 5 April 2019 are NOT covered;
- Long term property letting businesses are NOT covered; furnished holiday lettng businesses are also unlikely to be covered;
- Capped at average monthly profits of £2,500 / month (mirroring the Job Retention Scheme);
- Eligibility criteria:
- annual trading profits of up to £50,000;
- traded in 2019/20;
- majority of earnings come from self employment;
- filed a Self Assessment return for 2018/19;
- lost profits due to Covid 19; and
- intend to continue to trade in 2020/21;
- Scheme to run for "at least" three months (so the grant will for the time being be limited to 3/12ths of the average monthly profits);
- HMRC will contact those who are eligible directly; they will need to complete a "simple form";
- Money to be paid into the individual's bank account as a single lump sum;
- Payments won't start until June;
- Those who have yet to file their Self Assessment return for 2018/19 have until 23 April to file it; those that do not presumably will not be eligible;
- Tax credit claimants will need to report the grant as part of their self-employed income for 2020/21.
Unlike with the Job Retention Scheme, under this scheme you CAN keep working (provided you stick to the social distancing rules etc), but the latest updates to the guidance confirm that a taxpayer should not file a claim if their business has been unaffected by Covid 19.
For the Government's page on this - see here.
The Government thinks this new Scheme will cover 95% of self employed people.
The Chancellor hinted heavily that in future the Government will "even up" the contributions that employees and the self employed make to the welfare state.
We will provide further updates as soon as the Government publishes further details. We will also be rolling out a support service for customers who need assistance with completing the Scheme application form.
Contact Scholes CA by phone or e:mail for assistance.