Inca COVID-19 Update 6: Self-employment Income Support Scheme
27th March 2020
Self-employment Income Support Scheme – Q&A
Yesterday, the government announced details of its new Self-employment Income Support Scheme. The scheme has been created to help those who are self-employed and have lost income due to the Coronavirus pandemic.
Below are answers to some of the questions we’re being asked most frequently about the scheme by our clients:
Q: Am I eligible for the scheme?
The scheme is available to anyone who is self-employed or a member of a partnership. To be eligible, your business must:
– Have average trading profits of less than £50k per annum
– Have traded in the tax year 2019-20
– Generate at least 50% of your income from your self-employment
– Be trading when you apply (or at least would be if not for COVID-19)
– Expect to continue trading into the tax year 2020-21
Q: I started my business after 6th April 2019. What can I do?
If your business started after 6th April 2019, you are not eligible for support under the scheme. The Job Retention Scheme is available to self-employed businesses that are also employers. The Business Interruption Loan Scheme is also available subject to you meeting specific criteria, or you could apply for a traditional bank/personal loan. If none of these are available to you, your best option is to make an application for Universal Credit.
Q: What if I’ve not yet filed my tax return for 2018-19?
To make a claim under the Self-employment Income Support Scheme, you must have filed your 2018-19 self-assessment tax return. You only have until 23rd April 2020 to do so.
Although your profit for the tax year 2019-20 will not be taken into consideration – at least for the time being – submitting your 2019-20 tax return early could help if the government subsequently decides to extend the scheme. You might also have overpaid tax in your January 2020 payment on account: If business has gone badly and you made a loss in 2019-20, you might be due a tax refund.
Q: How will my income be calculated?
Under the scheme, you can claim up to a maximum of £2,500 per month for three months.
You’ll get a taxable grant based on 80% of the average profits (not turnover) for your three previous tax years – or from when your business started if this is less than three years ago.
Q: What if self-employment is not my primary form of income?
Your self-employed business must be your main form of earnings, not a side-line alongside employment. As evidence, it needs to account for more than 50% of your income.
Q: Will I need to make my payments on account in July?
No, any payments on account due in July 2020 are deferred to January 2021, and any VAT owing between 20th March 2020 to 30th June 2020 are postponed until the spring of 2021.
You can find more details about the Self-employed Income Support Scheme here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
Let Inca Help You Make Your Claim for Self-employment Income Support
Inca will be offering advice and support to clients on the practicalities of making a claim when it becomes available.
We hope you find this information useful. Please feel free to share it with other business owners in your contact sphere.
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