I’m self-employed and my profits are down because of coronavirus. Do I qualify for a grant?

16 April 2020

Businesses are struggling because of the impact of a tiny but deadly virus which is spreading rapidly across the world. Different countries have taken different approaches to help businesses throughout this crisis. In the UK, five million people are self-employed and many will have seen their profits plunge through loss of business. The UK government has announced that certain self-employed individuals will be eligible for a taxable grant – following the lead of countries like Norway and Denmark, and providing a similar level of support to that given to employees.

But who qualifies? The answer is not all five million!

The Self-Employed Income Support Scheme, or SEISS, allows you to claim a grant worth 80% of your trading profits up to a maximum of £2,500 a month. The grant will be liable to income tax and Class 4 National Insurance (where the relevant thresholds are exceeded). It is initially available for 3 months and the first grants are expected to be paid in as early as May 2020.

HMRC will contact you if they think you qualify according to their records, based on your Self Assessment tax returns. Therefore the key thing you need to actually do at this stage is to make sure you have submitted your 2018/19 Self Assessment tax return (and for earlier years, if these are still outstanding). If you haven’t already done so, you only have until 23 April!

Contact HendersonTax immediately if you have not yet filed your 2018/19 tax return and you think you might be eligible for the grant. Provided you have a UTR (Unique Taxpayer Reference) and all the relevant information, we will try our best to turn this round for you as quickly as possible – in many cases this can be within 24 hours.

The conditions to be eligible for the grant are as follows:

  • You must have submitted your Self Assessment tax return for 2018/19 (and earlier years) by 23 April 2020
  • You must have traded in the 2019/20 tax year
  • You are trading when you apply for the grant, or you would have been were it not for COVID-19
  • You must intend to continue to trade for the 2020/21 tax year
  • Your business must be ‘adversely affected’ due to coronavirus (you will be asked to delare this)

There are also conditions relating to your level of profits:

  • Your trading profits must be more than half of your total income – this is a crude measure to ensure that the grant is only applicable to those who rely on their trading profits to live – AND
  • Your trading profits must be no more than £50,000.

If you meet these conditions for the 2018/19 tax year alone, then you do not need to consider previous years when considering if you are eligible. If not, you can look at an average of tax years 2016/17 to 2018/19.

Only genuine trading profits from self-employed, or partnership profits, will be considered for the SEISS. If you operate through a limited company, then you may be eligible for support under the Coronavirus Job Retention Scheme, if you furlough yourself, in respect of your salary (but not dividends) – though you should seek advice before doing so.

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Self-employed individuals may also be eligible for other support from the government – for example, deferral of income tax and VAT payments, business rate relief and the Business Interruption Loan Scheme. You may also be eligible for welfare benefits, such as Universal Credit.

Note that unlike employees who are furloughed, self-employed individuals may still continue to work (indeed, you must be trading when you apply).

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If you’d like to chat about how we can support your personal tax requirements, or if you’d like to book a free consultation, we’d love to hear from you. Please fill out the form to get in touch.