- If you are self-employed as your main source of income
- You were required to complete a self-assessment tax return for the period ended 5th April 2020 (so were self-employed in the 18/19 tax year)
- You have trading profits of less than £50,000
- Intend to continue to trade in the tax year 2020-21
- More than half of your income comes from self-employment
- And your business has been affected by the Coronavirus
You will receive 80% of your average earnings over the past three years, up to a value of £2,500 per month for three months, in the form of a taxable grant. This will be paid to you in June 2020 as a lump sum for the three months.
To calculate how much you will be entitled to per month, do the following calculation –
Add up your last three years trading profits and divided them by three, to get an average yearly income. Then divide this by 12, to calculate your average monthly income and times by 80%.
Year 1 Profit £15,000 – Year 2 profit £20,000 – Year 3 profit £10,000
Total for all three years = £45,000 / 3 = Average over three years £15,000
Divide average annual earnings by 12 = £1,250.00
Calculate 80% of this = £1,000 per month
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will contact you if you are eligible for the scheme and invite you to apply online. Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details. Once the application has completed, they will pay the grant directly into your bank account, in one instalment.
To view the full statement made by Rishi Sunak, click here.