COVID, COVID, COVID. You had us at no social life until July at the earliest. Not.
To say times are tough right now for the self-employed would be an understatement, no hyperbole intended – if you’re sat reading this post, you’ve probably got a roof over your head and bountiful access to internet and toilet roll. Things could, no doubt, be worse.
And although it is the natural demeanour of the comedian to jest in times of duress, having your livelihood swept out from under you is no joke. But good news: help is now available to the self-employed (although I’m pretty sure I felt the fists of performers and freelancers everywhere clench at the government’s suggestion it had come “weeks ahead of schedule”).
The new scheme will allow you to claim a taxable grant worth up to 80% of your average monthly income. It’ll be paid out in a single instalment covering three months (March, April and May) which is capped at £7,500 altogether. This means that for now, it’ll ‘make up’ for you lost wages until the end of May, but there is a possibility that it’ll be extended beyond the spring.
In terms of readability, the HMRC website is a touch on the hieroglyphic side. So without further ado, here’s a breakdown of how this new system works, which I’ve attempted to make legible to English-speaking human beings residing in the 21st century.
How does HMRC’s new system for the self-employed work?
You’ll be able to make a claim through HMRC’s online portal if your income has been ‘adversely affected’ by Coronavirus. What does adversely affected by coronavirus mean? It could mean any of the following: you’re unable to work because you’re self-isolating, shielding, or are on sick leave because you’ve caught said virus. It could also mean you’ve had to stop trading because your supply chain has been interrupted by the Coronamess, your staff are unable to come into work or you have fewer or no customers.
First, though, HMRC advises that you use their eligibility tool to work out if you are, well, eligible to do so.
You’ll need to have your Self Assessment Unique Taxpayer Reference (UTR) number on your person, as well as your National Insurance number to do this. If you’ve lost either one, here’s where you can find your UTR number and here’s where you can find your National Insurance number.
To work out your eligibility, HMRC will look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If HMRC can’t deem you eligible based on the 2018 to 2019 Self Assessment tax return, they’ll then have a gander at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019. If you have multiple “trades” (maybe you’re a comedian and do other freelance bits and bobs on the side) HMRC will add together all profits and deduct any losses for all these trades to work out your overall income.
So, to recap, you can claim through the system if you’re self-employed or a member of a partnership (not a limited company or trust) and the following apply:
- – You spread the funnies and got paid for it during the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23rd April 2020 for that year
- – You traded in the tax year 2019 to 2020
- – You intend to continue to spread the funnies (ie. trade) in the tax year 2020 to 2021
- – Your ability to trade and spread the funnies has been adversely affected by Coronavirus
Support you receive through this system is subject to both Income Tax and Self-employed National Insurance. If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist (yes, by all means, let’s head to Syria).
If HMRC deems you eligible through their ‘pre-application tool’, they’ll give you a date you can make your claim from. Once you make your claim, you should receive the payment in your bank account within six working days. HMRC has said that it’s aiming to get the money into everyone’s bank accounts by 25th May. Absolutely no comments to add here about the probability of this happening. None whatsoever.
If you’ve been deemed ineligible for a grant or you think the amount of support you’ve been given has been miscalculated, you can ask HMRC to review the outcome. For this you’ll need:
- – Your grant claim reference
- – Your National Insurance number
- – The Unique Taxpayer Reference you used on your claim
- – The Government Gateway user ID you used to make a claim
- – Details about why you think the grant amount is wrong
You may also need the figures HMRC gave you in the grant calculation when you made your claim if you’re disputing how much money you’ve been given.
What else can you apply for?
- – Universal credit (with the possibility of an advanced payment)
- – If you haven’t paid all of it yet, you can delay your income tax second payment on account to 31st January 2020 instead of 31st July this year
- – Employment and Support Allowance (if you’re under State Pension age and you have a disability or health condition that affects how much you can work).
And there we have it. The Self-employment Income Support System, tied up in a somewhat financially ambiguous bow. Good luck, and see you on the other side…