The Budget announced that there would be 4th and 5th grants available to help the self-employed that have been impacted by Covid.
The 4th grant enables the newly self-employed to potentially claim the grant, as long as they had filed their 19/20 tax return by 2 March 2021.
Other than this the criteria remains the same as for the previous grants:
- You must have traded in 19/20 and 20/21 and intend to continue to trade. You cannot claim if you plan to close your business
- Your business must have suffered “a significant reduction in profits” in this claim period ( February to April 2021) and you need to make a declaration that this is the case.
- More than 50% of your income must come from self employment
- Average trading profit must be under £50,000
For these 2 criteria, HMRC will look at your 19/20 return first to see if you qualify. If you don’t meet the criteria in this year, then they will look back at your average income from 16/17 – 19/20 to see if you then qualify
To make the declaration that your business has suffered, you need to be able to prove that you have had a significant reduction in profit in this claim period due to:
- Reduced demand, activity or capacity – this could be fewer customers or activity due to covid restrictions, contracts being cancelled or a supply chain shortage
- Being unable to trade – either because you have had to close due to lockdown, have tested positive and been unable to work, or parental responsibilities have meant that you could not work
You are not able to claim it if the only reason your profits have fallen is due to increased costs ( eg additional PPE costs) – you need to be able to show that one of the two reasons above apply as well – and keep evidence of the fact.
The fall in profit must been in this claim period – if your business suffered last year but has not been impacted in this 3 month time frame then you can’t claim this time round.
As usual HMRC will contact you if they believe you may be able to claim -applications cannot be made until late April which has annoyed many, but as HMRC are including the 19/20 tax return info this time, they do need time to process the information they have been sent.
Pre-Verification Checks for the Newly -self employed:
This time, to protect the scheme from fraud, HMRC are writing to some taxpayers who became newly self-employed in 2019/20, asking them to complete pre-verification checks.
This will be a letter from HMRC, notifying you that HMRC will be calling you within 10 working days. On that call HMRC will ask you to provide an email address and for you to agree to them sending you a link to a secure dropbox. You then have 2 days to upload ID and 3 months worth of bank statements to confirm your business activities. You need to be quick – the link will expire after 2 days.
They will try 3 times to call you, and then send a further letter if they cannot contact you.
If you receive the letter but do not complete the checks, you won’t be able to claim the grant!
You must therefore make sure that HMRC have the right phone number for you, and not just your agent’s number! If you think this may need updating, contact HMRC on 0800 024 1222 ( this number is just for updating phone numbers!)
There is obvious concern that people may think this call is a scam, especially if the letter forewarning you of the call has been delayed in the post. If you need to call HMRC only use the official numbers listed on their website, and take the necessary precautions about giving out any personal information over the phone.
For any further information then please get in touch with Rosie Forsyth.