Covid-19 Support for Self-Employed – Updated

Lothian Accounting published on 26 March 2020 the support available for self-employed (which includes partnerships) and eligibility criteria. If you’re eligible and your business has been adversely affected you must make your claim for the first grant on or before 13 July 2020.

This support scheme for self-employed is being extended until 19 October 2020.

You’ll be able to claim a second and final grant from 17 August 2020 when the online service will be available.

The criteria for who can apply and the calculation for the first grant is set out in an earlier blog : https://www.lothianaccounting.com/covid-19-support-for-self-employed/

Second grant claim – how much you’ll get

To work out the average HMRC will add together the total trading profit for the 3 tax years from 16-17 to 18-19 (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount. This will include all trading profits and losses i.e. if a business has traded over 3 years and made a loss in one year and profits in two years, these are added together and divided by 3 to work out the average profits. If a business has only traded over the last 2 years and made profits, HMRC calculates average profits over 2 years

The grant will be capped at £6,750 for 3 months’ trading and will be based on 70% of average monthly profits (first grant was 80% of average monthly profits)

HMRC will pay the grant directly into the individual’s bank account, in one instalment.

HMRC will work out your eligibility in the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.

What does it mean by adversely affected?

HMRC’s definition of adversely affected is that

• You are unable to work because you:
  • are shielding
  • are self-isolating
  • are on sick leave because of coronavirus
  • have caring responsibilities because of coronavirus
• you have had to scale down, temporarily stop trading or incurred additional costs because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work
  • one or more of your contracts have been cancelled
  • you had to buy protective equipment so you could trade following social distancing rules

In practice, if you have lost clients, have undercharged for work or have written off significant bad debt due to the impact of coronavirus on your clients, this will also count as being adversely affected

You can claim for the second and final grant even if you did not make a claim for the first grant.