As you may have seen the yesterday evening’s news, the Chancellor has announced a further aid package to help support the self employed.
Before we go on, it has been made very clear that, unfortunately, this aid is only available to those business who are registered as self employed individuals with HMRC – if you run your business through a Limited Company, you are not applicable for the following.
The scheme is broadly as has been expected – qualifying individuals will be able to claim a taxable grant based on 80% of average earnings from the three tax years up to 2018/19, up to a maximum monthly equivalent of £2,500. HOWEVER, it’s expected that applications will not be accepted until ‘early June’ – presumably HMRC are having to prioritise the Job Retention Scheme for wages funding, and will be ensuring that is up and running first.
The qualifying criteria for the aid has been made clear:
- Submitted a Self Assessment tax return for 2018/19
- Continued trading as self employed in 2019/20
- Intending to trade in 2020/21 (even though initially you may not due to Covid-19)
- Have lost trading income/profits due to Covid-19
Your self employed profits must be less than £50,000, and more than half your income must be from self employment – i.e. you don’t qualify if you receive the bulk of your earnings from, say, a PAYE job, and have a secondary form of income from self employment.
The grant will be based on average earnings from the 2016/17, 2017/18 and 2018/19 tax years; if you started trading during that time, HMRC will use all earnings filed to determine your average profits. It remains to be seen if HMRC will consider earnings from 2019/20 when considering a claim, if the self assessment return for this year has already been filed by the time applications open. But if your earnings have been increasing year-on-year it may be worth preparing and filing your 2019/20 as soon as possible, on the off chance it will be considered.
Again, I must stress no applications for the grant can be made at this time. HMRC will be contacting you in due course if you qualify (i.e. you filed a self assessment for 2018/19 and the bulk of your earnings were from self employment).
If you are not going to qualify for this aid, either because your self employment commenced after 6thApril 2019, or because you run your business through a Limited company, I believe your first port of call at this stage would be to apply for Universal Credit.
At this time of uncertainty, please do not overlook the importance of having a Lasting Power of Attorney in place, for either yourself or more vulnerable members of your family.
Lasting Powers of Attorney are useful documents at any age and stage of life. A Lasting Power of Attorney is a legal document that, when registered with the Office of the Public Guardian, allows you to choose people to help with matters to do with your Property and Finance, or with your Health and Welfare.
In the current environment where many people are unable to conduct their normal day-to-day activities, a Lasting Power of Attorney for Property and Finance may allow the Attorneys to help with many financial matters.
If you’d like to discuss Powers of Attorney in more detail or would like some advice about how they can be used, please contact Cameron James Legal on 01243 696920.
Rob
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