Checking for eligibility – Self-Employed Income Support

HMRC are now offering an online checker tool for taxpayers wanting to check whether they qualify for the taxable grant:

To use this you need to input your 10-digit tax reference (UTR) and then your national insurance number. Taxpayers who are eligible are then invited to log in to give up-to-date contact details.

Those whose result shows they do not qualify can challenge this if they believe this to be incorrect – I have had at least two surprise results so far for clients whose figures show they should qualify.



Capital Gains Tax – deadline changes

Capital gains tax may be payable on the sale of an asset like a house (usually a second property rather than your main home), shares in companies, valuables like artworks, and sometimes on musical instruments.

From this tax year (April 2020), the deadline for reporting and paying tax on a ‘property’ sale (land or buildings) is now only 30 days from completion of the sale. Previously this information has gone into the next tax return, with the tax due on the relevant 31 January along with income tax. (Information will still need to be included when the tax return is done, to check there is no change to the amount of CGT when the whole year is considered.)

I shall be flagging this to all clients who I know own second properties, and any who have part of their home designated for work only (eg a studio outbuilding). The property market is quiet for now, but the new deadline will be very easy to miss.

VAT: Delay to next phase of Making Tax Digital

(There is no move to bring forward any changes to income tax returns for now and this seems unlikely to go ahead before 2022 at the earliest)

Since April 2019, VAT returns have had to be submitted using special software – either linking to a bookkeeping spreadsheet or via accounting software packages.

Phase 2, scheduled for April 2020, will make it compulsory to use ‘digital links’ to capture the total figures for the VAT return from bookkeeping entries – no typing in total figures for the return.

Yesterday there was a very welcome 11th-hour announcement that this next phase, MTD2, would be postponed to April 2021. One change fewer is certainly useful at this point.

Financial provision for some self employed

The assistance on offer as outlined today by the Chancellor – a ‘taxable grant‘ – applies only to self-employed taxpayers who are trading or intending to continue when circumstances permit, and who

  • Have submitted their tax return for the year ended 5 April 2019, including trading income (self employed or partnership income)
  • Have taxable profits from self employment of £50,000 or less, based on either

– profits under £50,000 for the year ended 5 April 2019 and more than half of total income is self employed (including partnership income); or

– an average of their last 3 years’ profits in their tax calculations being not more than £50,000

Taxpayers who are still working (maybe much less) can claim and still keep earning during this time.

Profits in a year a taxpayer didn’t have to pay tax (eg because they were under the tax-free personal allowance) still count.

Anyone newly self employed who did not have to submit a tax return yet does not qualify for assistance, although taxpayers one or two years in do based on tax returns so far.

The taxable grant will be 80% of self-employed profits per month up to a maximum of £2,500 per month. This will be available for at least 3 months. It is possible to claim the grant and also continue to earn for those who can.

HMRC will contact eligible taxpayers directly about the taxable grant, and there will be an online form to fill in. The aim is to make this available by early June. At the moment my understanding is that individuals will be contacted personally – not via tax advisers – and will need to make their own declaration online to apply. More news as any is released. (This is an entirely new system but I am hopeful that something simple and efficient will be put together.)

I have put a link to the right – TAXABLE GRANT: PROFIT FIGURES – to clarify which figure(s) from clients’ tax calculations are relevant. This may be useful when making an application. (Although as HMRC already holds the relevant information it may not be needed.)

Taxpayers who have not yet submitted their 2019 return have 4 weeks’ grace to do so (before 23 April), and can do this without the usual £100 penalty, and then apply for the taxable grant if eligible.

Income in the year to 5 April 2020 is ignored for the taxable grant.

Points not clear to me yet on the taxable grant, which I shall try to find out, are:

  • How HMRC will contact people (letter/email. Letter would seem less than ideal, since many have moved in with other family members for the time being and may not be at their home address.) We must be especially alert to possible scam emails around this
  • How a loss-making year is treated in the three-year average (I would guess counts as zero)
  • How the grant will be taxed (though I assume it will be taxed as part of earned income in the tax return)
  • Whether the £100 late penalty will be waived entirely (including for anyone who has already paid this) this year.

Business interruption loans may be available, including to those with profits over £50,000. There are details here

And some taxpayers will qualify for Universal Credit. There are many reports of difficulty getting through online/by phone with applications but more staff are being brought in to process these.

The Chancellor also hinted at raising national insurance in future for the self employed, to the levels paid by employees (broadly 3% more). This is too far in the future to know how it might work at this stage.

Calls for financial provision for the self employed

There is much speculation as to whether the Chancellor will announce any substantial help for self-employed taxpayers. Clearly everyone whose self-employed work is affected (including me) is hoping for news sooner rather than later, and some statement on plans is expected in the next few days.

Clients are understandably asking what is available and what information they will need to provide to access this. If anything is rolled out, I shall add a further update here. Taxpayers with mortgages are used to providing various information based on previous tax returns. If assistance is offered to the self employed which is administered by HMRC, it is highly unlikely that they would request previous years’ tax calculations, since this is information HMRC already holds.

In the meantime, anyone wanting to find out about Universal Credit can find information here, and check availability 

Taxpayers with children, but who do not claim Child Benefit because of income levels may wish to start claiming this now. This could provide some extra cash within the next few months. Worst case, this would be taken back in tax later (but not until 2022 if received from 6 April onwards this year). Child benefit can be backdated by  maximum of three months. Information on claiming is here

Some clients have asked about tax credits. These have been replaced by Universal Credit for new claims, but continue for taxpayers already receiving tax credits: there is information here

There is a BBC article here which explains some of the challenges of making aid to self-employed taxpayers work practically and fairly

20 March 2020

We can expect further announcements from the Chancellor in the coming weeks.

Cashflow is pressing for many. Announcements today affecting tax:

  • VAT-registered businesses can wait from now until the end of June to pay their next VAT bill
  • Those with income tax payments due this July can wait to pay until January 2021

There is also a business interruption loan scheme which will offer interest-free loans for up to 12 months.

Do be especially watchful for scam emails and calls at this time. These are likely to be on the rise, including increasingly convincing ones pretending to offer refunds from HMRC, at a time when people are understandably preoccupied.