COVID 19 – Sole Traders

The chancellor has announced the support for the self-employed – details are below:

The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.

To be eligible for the scheme you must meet all the criteria below:

  • Be self-employed or a member of partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
  • Have trading profits of less than £50,000 and more than half of your total income come from self-employmentThis can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018/19
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

How do I access it?

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account. HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.

Practical Steps

For those of you who qualify, you may need help with cash flow until the grant arrives. You should be able to:

  • Apply to your bank for a business continuity loan and/or an overdraft
  • Request a payment holiday from your mortgage company

Unfortunately it isn’t great new for those of you who started self-employment in this tax year, or part-way through 18-19 as you will either not qualify at or get very little. If you are in this position don’t delay starting your claim for universal credits. The link to the government information page is below.

https://www.understandinguniversalcredit.gov.uk/coronavirus/