Chancellor Rishi Sunak has confirmed that the government will be supporting the self-employed, but how will this work and what will you be entitled to?
The scheme will be available for at least three months which will take us to May 2020 but could be extended subject to review.
The Chancellor did confirm that this scheme will not be accessible until June, but grants will be backdated as a single lump sum. So, what are the advantages of the scheme and what does it mean for you? Hopkins Solicitors explores:
What does the scheme mean for you?
HMRC will reimburse a taxable grant of 80% of average monthly trading profits over the last three years capped at £2,500.00.
Unlike the Job Retention Scheme, the self-employed will be eligible for this scheme whilst continuing to do business.
Who can take advantage of the scheme?
The scheme will be available to anyone with trading profits of up to £50,000.00, self-employed people who earn more will not qualify.
You will only be eligible for the scheme if the majority of your income comes from self-employment.
If you pay yourself a salary and/or a dividend you will not be covered by this scheme and should seek advice with regards to the Job retention Scheme if you are operating PAYE schemes.
How will the scheme assess how much you will be entitled to?
You need to have submitted your tax return for 2019. The Government have confirmed that for those who failed to do so have a further four weeks from 26 March 2020 to do this so that they can also be eligible for the scheme.
How do businesses take advantage of the scheme?
You are not required to apply for the scheme. HMRC will contact those who are eligible and will offer you to fill in a form for them to pay the grant to you.
Before grant payments are made, you may be eligible for temporary funds which other schemes have to offer.
We all need to help each other and therefore we encourage the self-employed not to exploit this scheme and only use if required during this difficult time.
As you can see, although there is a scheme offered to help in these times of uncertainty, there are still a lot of grey areas and the issue that the support scheme will not be live until June.