On 27 March further measures were announced by Chancellor Rishi Sunak to provide support for those who are self employed and have lost trading profits due to COVID-19.
There have also been clarification re VAT deferral and rates retail discount for estate agents and other.
Support for self employed
Self-employed individuals and members of a partnership will receive direct cash grants to help them during the coronavirus outbreak, the Chancellor announced. They will receive up to £2,500 per month in grants for at least 3 months.
Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years. This covers 95% of people who receive the majority of their income from self-employment.
Cleaners, plumbers, electricians, musicians, hairdressers and many other self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into people’s bank account.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of their income in these periods must come from self-employment.
It should be noted that the scheme will not be available to those who have recently become self employed and not yet filed a tax return.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
Before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account. Self-employed may also be able to benefit from mortgage payment deferral and should contact their bank to ease cashflow burden as they effectively have to self-finance until the payments come in June.
Full details of the scheme are detailed on the government website here.
It was previously announced that businesses would be able to defer their VAT payments due over the next three months to help cash flow. For those who have direct debits set up to collect their VAT, it is important that these direct debits are cancelled otherwise the VAT will still be collected. It should also be noted that the VAT return is still required to be filed.
Business Rates Retail Scheme
The business rates retail discount previously announced has also now been extended to Estate agents, Letting agents and Bingo Halls.
See all our updates on COVID-19 measures here
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