Personal Tax & the Self-employed

French Duncan


 

This page was written Wednesday 25th, updated 2pm Friday 27th March.  Please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes.  For all our information around COVID-19 visit www.frenchduncan.co.uk/covid-19.

 

Self-employed & personal tax payers

The assistance available around the self employed, self assessment tax payers and individual support generally is moving quickly.  Below you will find summaries of the key areas of assistance available.

 

New self-employed income support scheme (SEISS) - announced 26th March:

This scheme will allow the self-employed to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

What is it?

  • A taxable grant will be available for the self-employed people (including partners in a partnership).
  • The scheme is for sole traders and partners in partnerships, not employees or directors of limited companies.
  • It will be worth 80% of the average of your profits of the three previous tax years, but capped at £2500 per month.
  • The newly self-employed are unable to qualify if they do not have trading profits in any of the previous three tax years.

What are the details?

  • Trading profits need to be down due to COVID-19.
  • Your profits need to have been less than £50,000 in the 2018/19 tax year, or an average of less than £50,000 for the three tax years 2016-17, 2017-18 and 2018-19.
  • The business needs to have traded in 2019-20 and be currently trading when the application is made (or would be, except for COVID-19) and intend to continue to trade in the 2020-21 tax year. We anticipate that this will be covered further in the application form you will need to complete.
  • More than half of the claimants total income must be from self-employment either in 2018/19 or on the average of the last three years, 2016-17, 2017-18 and 2018-19.
  • If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
  • To work out the average, HMRC will add together the trading profit for each of the 3 tax years then divide by 3. If you started trading during that period , they will use your actual period for the calculation of the average. This will give an annual average of your earnings. From this they work out the monthly amount. This is your average monthly earnings over the previous tax years.
  • The monthly grant will be 80% of these monthly average earnings, but subject to a maximum of £2,500.
  • The grant will cover three months and be paid in a lump sum.
  • If necessary, the Government will extend the scheme beyond three months.

What do I need to do?

  • Anyone who did not meet the 31 January 2020 tax return deadline for their tax return to 5 April 2019 has until 23 April 2020 to file this return, otherwise they will not be eligible for the scheme.
  • HMRC do not want you to contact them about the grant. HMRC will identify potential claimants and invite applications from early June.
  • The grant will be paid by HMRC straight into the individual’s bank account.
  • The grant will form part of the individual’s income for tax credit purposes.

 

Self-Assessment payment deferrals:

For self-assessment payments due on the 31 July 2020, these will be deferred until the 31 January 2021.

  • Initially HMRC stated that if you are self-employed you are eligible, but it now appears this is available to anyone with payments on account.
  • This is an automatic offer with no applications required.
  • No penalties or interest for late payment will be charged in the deferral period.
  • The deferment is optional, but HMRC urge you to pay your second payment on account due, 31 July 2020,  if you are in a position to do so.
  • This is all in addition to the time to pay offer currently operated by HMRC.

 

Landlords (specifically, furnished holiday lets):

  • The Scottish Government on 30th March expanded the previously announced business Grant scheme support to also include some furnished holiday let landlords, including ‘caravans and self-catering accommodation that are the primary income for the ratepayer and let out for 140 days or more in 2019-20'.  For more information see our separate blog by clicking here.

 

Working Tax Credits:

  • As part of a number of measures to support the country during the coronavirus (COVID-19) pandemic, Working Tax Credits payments will be increased by £20 per week from 6 April 2020 until 5 April 2021.
  • The amount a claimant or household will benefit from will depend on their circumstances, including their level of household income. But the increase could mean up to an extra £3,040 in the 2020 to 2021 tax year.
  • If you claim Working Tax Credits, you don’t have to take any action or contact HMRC - the increase in your payments will start from 6 April 2020.

 

Statutory Sick Pay & Universal Credit:

  • SSP will be payable from day 1 instead of day 4 for affected individuals.
  • People who are advised to self-isolate for COVID-19 will can obtain an isolation note to cover this. Do not go to your GP.
  • Those who are not eligible for SSP, e.g. self-employed earning below the £118/week, can now make a claim for Universal Credit or Contributory Employment and Support Allowance.
  • The self-employed cannot claim SSP however you may be eligible for Universal Credits and/or Employments and Support Allowance. See:
  • These may also apply if you are prevented from working because of a risk to public health.

 

Other COVID-19 Information:

Full details of how we can help you around COVID-19 / Coronavirus is available on our special page (www.frenchduncan.co.uk/covid-19) which you can access by clicking here.

This page has links on it to our various other blog pages, for example on:

 

 

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