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Who can apply for the grant?

Following the announcement by the Chancellor Rishi Sunak on 26 March 2020 advising of the emergency package to support 5 million self-employed workers throughout Britain, there has been a further update to the guidance.

The scheme will be available to self-employed individuals or members of business partnerships, if the following are met:

  • You have been adversely affected by COVID19 – please see below
  • You traded in the 2018/19 tax year and your personal self-assessment tax return for 2018/19 was filed by 23 April 2020
  • You continued to trade in the 2019/20 tax year
  • You intend to continue to trade in the 2020/21 tax year

Your business could have been adversely affected by the coronavirus, in the following examples:

  • You are unable to work because you are; shielding, self-isolating, on sick leave due to the coronavirus or have caring responsibilities as a result of the coronavirus
  • You have had to temporarily stop or scale down your business due to the following; an interruption in the supply chain, your customer/client numbers have reduced or are no longer there, your staff are unable to come into work

You should NOT make a claim if you are above the state aid limits or operating a trade through a trust. For details on this please see the following link:

https://www.gov.uk/guidance/how-different-circumstances-affect-the-self-employment-income-support-scheme#stateaid

To qualify for the scheme your self-employed trading profits for 2018/19 must be less than £50,000 with at least half your income being from self-employment.

If the above does not apply, your trading profits for 2016/17 and 2017/18 will then be considered.

What will be available and when

It was announced that the self-employed will receive a ‘taxable grant’ based upon the average trading profit over the past 3 tax years, up to 2018/19; 2016/17, 2017/18 and 2018/19.

The three accounting periods will be added together and multiplied by three.

Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years, paid in one lump sum covering 2 months, this will be capped at a total of £7,500.

Online services will advise how the grant has been calculated and recipient will receive this directly into their bank accounts.

If an individual has less than 3 years trading profits, the payment will be averaged over the period they have been self-employed and trading.

Eligibility to claim

Initially it was thought that this would be through your agent online services. It has now been announced that this will be through an online tool, which can be accessed by either yourself or your agent.

You can check your eligibility to claim at the following link:

https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

You will need the following information:

  • Self-assessment 10-digit tax reference
  • National Insurance number

If you are eligible HMRC will advise the date from which you can apply and ask for contact details. You will then be reminded once the online tool is available. HMRC aim to contact eligible claimants by mid-May 2020. Payments will be made by early June 2020, if your claim is approved.

If you are unable to apply online, an alternative method will be announced and we will update you with this, once we have more information.

What you will need for the claim

  • Self-assessment 10-digit tax reference
  • National Insurance number
  • Your Government Gateway user ID and password
  • Your bank account number and sort code, to where you want the grant paid to

You will be asked to confirm that your business has been adversely affected by coronavirus.

Application for the grant will confirm to HMRC that you are below the ‘state aid limits’.

HMRC have confirmed that claims will be checked, and action will be taken to withhold and or recover payments found to be inaccurate or dishonest.

What happens next

You will be advised upon application if you have been successful and funds should be paid directly to your bank account in 6 working days.

You must continue to keep all records in line the normal requirements of the self-employed. In addition, you will need to include the following: 

  • The amount claimed
  • The claim reference number for your records
  • Evidence that your business has been adversely affected by coronavirus

The grant received will need to be:

  • Reported on your self-assessment tax return
  • As self-employed income for Universal Credits
  • As self-employed income and that you are working 16 hours a week for you tax credits claim, if applicable

Please contact the Spirare Team if you require any support with the above.