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What exactly does the Self-Employment Income Support Scheme mean for me?

When the Government announced that support would be available for the self-employed in the form of the Self-Employed Income Support Scheme a wave of relief was felt by all self-employed individuals.  However, that relief quickly turned to anxiety when trying to work out exactly what it meant for them in financial terms and whether or not they would qualify.

Fortunately, HMRC has recently issued guidance on how to work out the total income and trading profits under the Self-employment Income Support Scheme which is explained below.

Firstly, who is eligible to get the grant?

All self-employed individuals are eligible for a taxable grant representing up to 80% of average profits if their 2018/19 trading profits were less than £50,000 and account for more than half of their taxable income.

If 2018/19 profits don’t meet the requirements then individuals can still qualify by using the average of 2016/17, 2017/18 and 2018/19 trading profits.

Calculating trading profits.

HMRC has confirmed that it will use the figures on personal tax returns for total trading income (turnover), then deduct any allowable business expenses and capital expenditure. This is the trading profit after all expenses including flat rate expenses, the trading allowance and capital allowance claims, but before taking off the personal allowance. If trading losses from previous years were used to reduce the trading profit, HMRC will ignore the loss relief claim. This means that an individual can still get the grant even if they didn’t pay tax on profits due to loss relief. However, if a trading loss was made during 2016/17, 2017/18 or 2018/19, then it will reduce the average trading profits and the grant.

How do you apply?

HMRC will be contacting all eligible individuals and inviting them to apply online. The maximum amount is £2,500 per month for three months, so to get the full amount you would need to have average profits of at least £37,500 per annum.

When can I expect to receive payment?

The payments are expected to be made in June 2020.

If you or someone you know requires legal advice or assistance regarding the above, please contact us.

At Parfitt Cresswell we would love to help you and are offering a number of complimentary telephone/video conference consultations this month. To find out more and reserve your spot to speak with one of our legal experts call 0800 999 4437 or email enquiries@parfittcresswell.com today.