Covid-19 Late Self-Assessment Support

Mar 28, 2020 | Articles, Covid-19, Covid-19 Guides and Articles, Self-Assessment, Taxation, The Material | 0 comments

On 26 March 2020, Chancellor Rishi Sunak announced assistance for the self-employed, intended to be comparable to the help already in progress for furloughed employees. At the time of writing the fine detail is still emerging, but the basics are in this article.

The late self-assessment deadline is Thursday 23 April 2020.

The new deadline is an opportunity for the self-employed that have not yet filed for the tax year 6 April 2018 to 5 April 2019, to get their tax return filed and become eligible for the COVID-19: Government Help for the Self-Employed grant that is being offered by the Government. 

To clarify this extension is to claim help under this scheme – there is no suggestion that the standard late filing penalties will not apply! 

Many self-employed individuals will be able to manage this themselves, and will already have access to their Personal Tax Accounts to be able to do so. 

However:

  • If this is your first filing
  • You do not have access to your Personal Tax Account and are unsure how to access this
  • You have not yet registered as self-employed
  • Or, are not confident enough to do this yourself

We at JTAccountS® are willing to help, and will be accepting clients on a one-off or ongoing basis for the next three weeks; ending Friday 17 April 2020. 

To be able to act on your behalf, you will need to sign a letter of engagement accepting our terms and conditions; together with a fee payment agreement. We recognise right now that money is a huge concern and we want to accommodate individual circumstances wherever we can. 

Our fees start from £30 per month, plus VAT, based on the HMRC self-assessment year and the final charge will be dependent on the complexity of the work involved. The full amount can be made in one payment if preferred, and this will be encouraged if the work is one-off.

Eligibility

To be eligible for the COVID-19: Government Help for the Self-Employed grant, some conditions have to be fulfilled: 

  • You must be self-employed or a partner in a partnership
  • You must have submitted your 2018/2019 tax return
  • You must be still trading in 2019/2020 and be trading at the time of application, or only not trading at that point as a result of COVID-19
  • You must intend to trade in 2020/2021
  • You must have lost profits as a result of COVID-19
  • Your self-employment profits must be less than £50,000 and constitute more than 50% of your total income. It is assumed that the “total income” referred to here is derived from Step 1 S23 Income Tax Act 2007. Identify the amounts of income on which the taxpayer is charged to income tax for the tax year. The sum of those amounts is “total income”. This is not confirmed on the gov.uk website and may need to be updated. 

Qualification by having self-employed income less than £50,000 for these provisions is by meeting at least one of two conditions:

  • Trading profits less than £50,000 in 2018/2019 but such profits representing more than 50% of total income for that year
  • Average trading profits for tax years 2016/2017, 2017/2018 and 2018/2019 less than £50,000 but such average profits representing more than 50% of average taxable income for the same period.

There is a lot of grey space here, and while it is apparent in the Chancellor’s address that the relief is targeted at those on lower-income, there will be those that are not that may also benefit. 

These are very early days, and the answers will become more evident as the scheme evolves over the coming weeks.

It needs to be heeded by the self-employed seeking to exploit the help on offer will be prohibited. 

Where the trading history is shorter than three years, it is unclear whether the calculations will be by reference to only the last year or an average of, where relevant, two years. 

How the grant will be calculated

  • The grant will be based on average profits for the three years 2016/17, 2017/18 and 2018/19. Entitlement will be to 80% of the average (divided by 12) per calendar month, of £2,500 if lower. 
  • The grant is to last (currently) for three months and will be paid to taxpayers’ bank accounts in a single instalment around 1 June 2020.

How to get the grant 

The message from Government is that they will contact you; do nothing for now other than file your 2018/2019 tax return, if you have not already done so. 

HMRC will contact you if they consider you are eligible and invite you to apply for the grant online. 

Nothing will be paid out until June “at the earliest” according to the gov.uk website. 

You will also need to treat any grant received as income if you are claiming tax credits. 

What if I am also an employee?

It appears at this time that, subject to meeting the conditions, a furloughed employee with self-employment could also be eligible for the help extended to the self-employed. A furloughed employee with a salary of £37,500 and average self-employed profits of £38,500 appears to satisfy the conditions for the assistance for the self-employed and as such that they might have a valid claim for £5,000 per calendar month, and a husband and wife in the right circumstances might also have a valid claim for £10,000 per calendar month between them. 

However, our personal opinion on this point is that both schemes are still evolving and with it, the Government will be ironing out the kinks. Therefore it is likely there will be an acknowledgement somewhere down the line that you have to confirm you are not also benefiting from one of the other schemes.

You can read the full text of the current guidance at the following location:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

For all other Covid-19 information, please check out our Covid-19 Support Page:

https://jt-accounts.co.uk/covid-19-support-page/

About This Artical:

Covid-19 has impacted everyone on a different level, this article should help self-employed to understand the support that has been annouced. These are all official UK government implementation to support the economy and individual livelyhoods.

We will updated all articles on a daily basis with new information or changes that come into play.

Please get in contact if you have any questions, as all of the JT AccountS® services are still fully operations. Our staff are remotely working from home and can support you within this time.

Other Covid-19 Information:

Practice Number: 21331

Jacqueline Tetley is licensed and regulated by AAT under licence number 5096.

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