Do I qualify for grant boost?

Support scheme will give vital financial help to self-employed – if they can prove their eligibility

Q

I’VE BEEN reading that the second self-employed grant is now available and might help replace some of the income I have lost since March.

I’m not sure how it works and whether I will qualify. Can you help? Margaret Johnston

A

IT’S formally known as the Self-Employed Income Support Scheme and has been open for applications since Monday of this week.

By lunchtime on Monday, it looked as though nearly 40,000 people had already applied for the grant. It’s very similar to the first grant that was available under this scheme, which closed for applications in mid-July. If you are eligible – and we will look at eligibility conditions later – you should be able to claim 70 per cent of your trading profits up to a maximum of £2190 per month. It’s a grant so you don’t have to pay it back but it is taxable. To be eligible for this money, a self-employed person will have to have completed a tax return for 2018-19. Trading profits will be calculated as the average over the last three years, or using as much information as is available if you haven’t been working for three years. There are other eligibility rules for the self-employed scheme that will make it difficult for some people to claim.

First of all, you have to have been trading in 2019-20 and have to intend to trade in the tax year 2020-21, which began on April 6.

There are further restrictions on claims because your profits from self-employment must be less than £50,000 and more than half of your income must come from self-employment.

HMRC will look at previous returns to check these figures.

Remember that pension income or income from savings or property all count as income and can’t be more than 50 per cent of your total income. New for this application, you have to be able to confirm that your business was affected negatively by the coronavirus on or after July 14.

The scheme itself is actually very generous for those who can claim.

The problem that hasn’t been addressed since the first grant was introduced earlier in the year is that there will still be many self-employed people who won’t be able to make a claim.

They have been told they will have to try the benefits system if they are unable to take advantage of the self-employed scheme.

Of course, many self-employed

taxpayers will already have taken advantage of the Government’s offer to defer income tax payment due at the end of last month. These payments now don’t have to be made until the end of January 2021.

This move will have helped many taxpayers who will now have more money in their bank account than they might expect at this time of the year.

It should provide relief since that money can be used to supplement their income – especially if they find they don’t qualify for the self-employed scheme.

The problem with the deferment of tax is that the payment has not been waived, just deferred, and will still have to be paid at the end of January next year.

There is no guarantee the self-employed will see profits back to normal by then and it’s doubtful in many cases whether they will have the ability to save enough to pay January’s tax bill as well as the one they deferred in July.

As I hinted, the big problem with the second edition of the self-employed scheme is that it has done nothing to help the tens of thousands who were excluded first time round.

Anyone with profits greater than £50,000 will receive no benefit at all.

This strikes me as grossly unfair. A household with two self-employed each with profits of £49,000 could get more than £4000 a month from the scheme while a household with one person earning £51,000 will get nothing.

Anyone who is new to selfemployment will get no help either. And this is unfair. It means that tens of thousands will be reliant on Universal Credit if they qualify.

Chancellor Rishi Sunak had an opportunity to put these things right with the second grant for the self-employed. It’s a shame he hasn’t taken the opportunity to level the playing field.