The Government announced yesterday, 26 March, extensive measures of support for self-employed individuals.
But what steps do self-employed individuals need to take to make sure they take full advantage of the support being offered?
Emma Beynon, a tax consultant at Kreston Reeves, offers this advice.
What do I do now?
· Check your prior year tax returns to assess whether you are eligible on the majority trading and £50,000 trading profit conditions.
· Get your tax return for 2018/19 filed if you have not yet done so (by 23 April 2020).
· Grants are expected to be paid out in June, so there may still be some concern around cashflow until the grant is paid, and this will need to be factored into your cashflow forecasts.
· Consider other help you may be eligible for as a self-employed worker.
· If you haven't heard from HMRC in the next few weeks and you believe you are eligible then do make your application to HMRC for the grant. HMRC will be checking your eligibility against their records and there will certainly be some who are in danger of falling through the cracks.
Emma adds: "It is hoped that the scheme will not be by invitation only as there could well be circumstances where HMRC fails to successfully make contact. Perhaps we will see a fast track for those invited but an alternative route for other self-employed persons?
"Although taxpayers who trade through their own company may consider themselves self-employed these measures do not extend to cover the shareholder directors of personal trading company. The Coronavirus Job Retention Scheme offers some cover to employees but directors are unlikely to benefit as they are central to the ongoing operation of the business.
"And remember, this is not tax-free income. The payments will form part of your trading profit for the year and be taxed along with the rest of your trading profits through your Self-Assessment Tax Returns."
Emma concludes: "These measures are certainly welcome and go some way to alleviating the losses that are no doubt being experienced by self-employed business around the country but with grant funding delayed until June (at the earliest) many self-employed businesses will face real financial hardship over the next three months. Short term loans, deferrals and payment holidays will also be important if we are to see as many businesses as possible make it through to 2021."