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Good morning. Today we’re going to focus on two topics of interest to businesses and the self-employed. The first is the government’s new Business Support Finder Tool and the second is an update on the Self-employed Income Support Scheme.
New Business Support Finder Tool
On Monday, the government announced that it had launched a new, online tool to help businesses and self-employed people find support during the COVID-19 pandemic.
It’s designed to help you quickly determine which government financial packages you may be eligible for. It only takes about a minute to complete, and our initial testing has had positive results. Depending on your circumstances, the tool not only directs you to grants and loans schemes (such as the Coronavirus Job Retention Scheme and the Self-employed Income Support Scheme), but also indicates whether you can defer VAT or self-assessment payments on account, claim an employers’ Statutory Sick Pay rebate and more.
So, if you’re unsure about what help is available, or you think you may have missed an avenue of support, it’s worth seeing what the tool suggests. Just click on the following link.
Self-employed Income Support Scheme
A number of clients have asked us how they should calculate their trading profits for the Self-employed Income Support Scheme.
It’s worth taking time to understand this now. Even though HMRC won’t be inviting self-employed people to apply until mid-May, it’s a good idea to prepare for making a swift application. That way you could see the one-off grant paid into your bank account as soon as early June.
Before we move on to trading profits, it’s worth a quick recap of who is eligible for the scheme. To claim 80% of your trading profit you must:
- ***Have submitted your 2018/19 self-assessment return by 23 April (that’s tomorrow!)***
- Be self-employed (this includes members of LLPs and partnerships)
- Have traded before the 2019/20 tax year and be intending to trade during the 2020/21 tax year
- Be currently trading, or would be if it weren’t for the pandemic
- Have trading profits of £50,000 or under. These must make up more than half of your income for either the 2018/19 tax year OR the average income for the three tax years from 2016/17 onwards (see below).
The scheme currently covers three months, but may be extended.
Trading profits for the Self-employed Income Support Scheme
Put simply, your trading profit is your trading income, minus:
- Allowable business expenses
- Capital allowances
- Flat rate expenses
- Trading allowance
- Qualifying care relief (such as for foster carers)
If you have made trading losses brought forward from before 2016/17, these do not need to be incorporated in your calculations. Losses after this date must be included and used to calculate your average income. Unfortunately, if you have made an overall loss since the 2016/17 tax year, you will not be able to claim a grant under the scheme.
How to calculate your overall income
As we mentioned earlier, your trading profits not only have to be £50,000 or under, but they need to make up more than half of your income. These are the other income streams that you need to calculate before submitting a claim:
- Income from earnings (e.g. if you are employed in another job)
- Property income (e.g. for landlords)
- Savings income
- Pension income
- Miscellaneous income (such as DWP benefits).
If the total of all these income streams is lower than your trading profits, then you can claim under the scheme.
What do I need to do next?
HMRC will write to all potentially eligible self-employed people by mid-May. You’ll be invited to apply via the GOV.UK online service. In the meantime, you are allowed to make a claim for Universal Credit if you qualify for that.
It’s also worth noting that, if you’re also employed, you can still benefit from the Coronavirus Job Retention Scheme as well as claiming via the self-employed scheme.
Lastly, if you do receive a grant via the Self-employed Income Support Scheme, remember it will be liable to tax and NI. So, remember to put some of it aside if you possible can!
If you have any questions about the scheme, or would like any other help locating financial assistance, be sure to get in touch. We’d be very happy to help.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.