The self-employed grant is a scheme set up by the government to support businesses and entrepreneurs through the coronavirus. It allows you to claim for 80% of your profits and it’s paid out in a single instalment. This is over a period of 3 months and is capped at £7,500. It is set at 3 months currently. However, due to the air of uncertainty, the scheme could well be extended. The big bonus of this self employed grant is that you don’t need to pay it back.
However, this doesn’t mean it comes to you free of charge. Instead, it will be added to all your other taxable income for the year and taxed accordingly.
Are you eligible for the grant?
There is also a set of criteria you have to meet to be eligible to apply for the grant. Firstly you need to be a self employed individual or in a partnership and all of the below have to apply-
- If you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- If you intend to continue to trade in the tax year 2020 to 2021
- you carry on a trade which has been adversely affected by the coronavirus
HMRC themselves have stated that the term ‘adversely affected’ can mean a range of things. This could be that you were advised to shield, had to take sick leave or to self-isolate. In addition to this if you’re unable to go into work or your supply chain has been affected, these can also count. It’s also important to note you can’t apply for the self employed grant if you’re trading as a limited company. You can also check if you’re eligible by visiting the government website here.
Should I go for the self employed grant?
By all means you should be taking advantage of this grant, mainly as you don’t need to pay it back. It’s just important to note that it is subject to income tax. The reason this is important to note is so you can plan financially around what you are expecting to receive. Which isn’t the full 80% at face value that some businesses were lead to believe. If you have any questions about the self employed grant and how it can benefit your business, get in touch.
Our team here at D&K Accounting can run through the in’s-and-out’s of the self employed grant. We can also provide advice on how the grant can be put to best use within your business. After all, it’s best that you know what you’re getting yourself into before you apply for the grant.