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COVID-19 Information Hub

Coronavirus Self-Employed Income Support Scheme Grant Extension

On 30 November 2020, a further grant under the Self-Employed Income Support Scheme was opened for individuals affected by the Coronavirus (Covid-19) whose main source of income is through self-employment or as a partner in a partnership. This is in addition to other measures put in place to help individuals struggling to cope financially. This scheme is only open to people classed as ‘self-employed’ - it will not apply to individuals trading through a limited company (please see our commentary below). Other exclusions also apply.

Please read on for a summary of advice issued by the government and our own supplementary commentary, analysis and guidance.

Updated 22/10/2020

Eligibility

You will be eligible where all of the following apply:

  • You have been trading in 2019-20, and are trading when you apply, or would be were it not for Covid-19.
  • You intend to continue to trade in the 2020-21 tax year.
  • You have lost trading/partnership trading profits due to Covid-19 as a result of fall in demand, activity or capacity. Increased expenses that lead to a fall in profits does not count.
  • You have filed a self-assessment tax return for the 2018-19 tax year in which self-employment profits are included. The deadline for meeting this requirement was 23 April 2020. If your 2018-19 tax return is still unfiled, you will not qualify for the grant.
  • Your trading profits were below £50,000 in 2018-19, or your average trading profits over 2016-17, 2017-18 & 2018-19 were below £50,000 (or over 2017-18 & 2018-19 if you were not trading in 2016-17).
  • More than half of your total taxable income on average came from your self-employment business over these tax years.

How to access the scheme

You will need to:

  • Apply using this link. Click on the green ‘start now’ button and following the on-screen instructions.

What is excluded?

  • Anyone whose self-employed profits exceeded £50,000 on average over 2016-17, 2017-18 & 2018-19, or if trading only in 2018-19, where profits exceeded £50,000 in that tax year.
  • Anyone whose self-employed profits made up less than 50% of their total taxable income from all sources during these tax years.
  • The newly self-employed who commenced trading after 6 April 2019.
  • Anyone whose profits have fallen solely as a result of increased costs of business.
  • Owner-directors of limited companies.

More guidance can be found here.

Details of how HMRC calculate the grant can be found here.

Kirk Rice commentary:

HMRC are now tightening their processes and looking closely at those who apply to ensure that they are genuinely being adversely affected by Covid-19 over the period of the claim. Any claims that are found to be fraudulent will be repayable, together with a fine.

Newly self-employed individuals who started trading after 6 April 2019 will not benefit from the grant. If the Coronavirus continues to impact upon the ability to do business well into 2020-21, it will be interesting to see if the government will allow the newly self-employed to participate once their 2019-20 self-assessment tax returns have been filed with HMRC. Time will tell, but that may well provide an incentive to get your tax return filed early.

HMRC in their early guidance, has confirmed that any grant paid out under the Self-Employed Income Support Scheme will affect any claims to tax credits and any grant awarded under the scheme will also be treated as taxable income in the hands of the recipient. The grant will be subject to both income tax and National Insurance Contributions.

One of the qualifying criteria for the new grant is that you have lost trading/partnership profits as a result of a fall in demand, activity or capacity due to Covid-19. We are not sure how this aspect will be measured, but advise that it would be prudent to keep a record of lost clients, or client jobs/contracts that have been cancelled or postponed as a direct result of the virus. Where you have had to reduce your fees, then keep a record of those as well.

Trading via a Limited Company

Owner directors of limited companies are not included in the measures. This all comes down to the distinction between someone who operates their business in their own name under a self-employed trade, and someone who runs a company through which they are either paid a salary or extract profits via dividends (or both). It is only the self-employed traders who will benefit.

Private company owners who operate on their own, perhaps via a Personal Service Company, and who have no employees can now be included in the Job Retention Scheme (see here) under the furloughing provisions provided they have been paying themselves a salary via a PAYE scheme. Any such furloughed directors may only complete their statutory duties, and must not undertake any other work during the period of furlough. Where a company owner has only been paying themselves via dividends, they will not be included in the scheme.

There is also help via the Business Interruption Loan Scheme (see here), the Business Bounce Back Loan Scheme (see here) and the VAT Deferral Scheme (see here), and access to state benefits such as Universal Credit (see here).

We will be updating this page for the answers as and when they become available, so please, do check back regularly for further information.

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