26 March Update - Self employed

Tonight saw the Chancellor announcing the package of assistance to Self Employed people

Here is a summary of the main points and comments on the points of concern and operational difficulties it may give rise to. Our comments are in CAPITALS:-

•         Open to all self-employed with annual trading profits of no more than £50,000
•         Main income must be from self-employment and you must have submitted a tax return for the year ended 5  April 2019. 
•         If  you have not yet submitted your 18/19 Tax Return there is a 4 week window for you to do so and still qualify.
•         A Taxable Grant of up to 80% of an average of the monthly profits over the last 3 years.
•         The grant will be capped at £2,500 per month per person.
•         If you do not have 3 years of Self-employment income the grant will be calculated on what you do have.  
•         If you are newly self-employed (commenced after 5th April 2019) and had no requirement to report your income on a 2019 tax return you will not qualify for the grant.
•         The grants will be paid for a total of 3 months, and will be paid as one lump sum.
•         We can expect the grants to be paid sometime in June. THE CHANCELLOR SAID EARLY JUNE BUT THIS IS THE HMRC THAT ARE ROLLING THIS OUT!
•         HMRC will be contacting qualifying tax payers directly to arrange the payments.

WE ALSO WANT TO COMMENT ON THE MANY CLIENTS WHO DO OPERATE VIA A COMPANY AND ARE THEREFORE NOT SELF EMPLOYED. HOWEVER, THEY MAY WELL CONSIDER THEMSELVES TO BE SELF EMPLOYED. IN ORDER TO BE TAX EFFICIENT THEY TAKE A RELATIVELY SMALL SALARY WITH THE BALANCE IN THE FORM OF DIVIDENDS. THEY WILL NOT RECEIVE ANY SUPPORT UNDER THE SCHEME ANNOUNCED TODAY AND THE SUPPORT THEY WILL RECEIVE WILL BE VIA THE JOB RETENTION SCHEME. WE HAVE ALREADY PROVIDED INFORMATION ON THIS BUT TO RECAP; IF YOU ARE UNABLE TO WORK “YOUR” COMPANY WILL BE ABLE TO PUT YOU ON FURLOUGH AND RECOVER 80% OF YOUR MONTHLY SALARY FROM THE GOVERNMENT. FOR MOST PEOPLE THIS WILL PROBABLY BE ABOUT £600 TO £700 A MONTH, DEPENDING ON SALARY LEVEL. SOME COMPANIES WILL ALSO BE ELIGIBLE FOR EITHER THE £10K OR £25K GRANT. DETAILS OF THIS HAVE ALSO ALREADY BEEN CIRCULATED IN OUR UPDATE OF 25TH MARCH.

So the impact on Self Employed people and those who fall into the category above is likely to be a shortfall of money for at least 2 to 3 months.

There is some help available –

•         Business Interruption Loan – available from High Street Banks, interest free for 12 months.
•         Universal Credit – apply online – waiting time for this credit has been reduced and you can expect to receive a payment within days of applying.
•         Mortgage payment holiday – If your income has been affected by the current situation your Bank or Building Society have agreed with the government that this will be available.
•         Council tax – please check your local authority website as most are now updated and offer a similar  3 month holiday.

There are also various tax breaks re VAT and PAYE payments.

We realise that many of you will have queries and concerns regarding the above and as a result we do expect our telephone lines to be inundated at what is already a busy time, we therefore ask that you email your questions to us and we will endeavour to reply to you by email or telephone as soon as possible.

Finally, we have placed all of our updates on our website on the Coronavirus Updates page. If you do want to look at the older ones you can find them all there together.

Please take care and realise that we are here for you at this difficult time.