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The Chancellor announced a bonus scheme for self employed sole trader / partnership persons.
The bonus will be calculated by HMRC automatically and will not need any application to be done to HMRC (PHEW!) HMRC will send you a letter that you will need to return. This letter includes a declaration that you still operate this self employed business (or will be once able to restart work) and your bank details.
The scheme will be open to people who meet the following criteria:
1 - Have self employed profits under £50,000
2 - Were self employed in the year to 5th April 2019 and have submitted their tax return to HMRC for this year (which all Butlers clients have!)
3 - Their self employment is the main source of their income. (So if you earn say £20,000 from employment and £5,000 from your self employment you will NOT be eligible).
The bonus will be calculated by the following:
1 - Taking the total you have earned in business profit (we hope this is before capital allowances) for all years that you have been trading in the last 3 years.
2 - Dividing this total by the amount of years included. So if you have been self employed for 3 years the total will be divided by 3 years, if self employed for 2 years then it will be divided by 2. This will give an annual amount and you will receive 3/12th of this as a bonus. For most people earning the same each year you can estimate this as 3 x your monthly profit.
3 - The maximum you will receive is £2,500 per month
This bonus is taxable and subject to national insurance when your 2020-2021 tax return is prepared.
If you wish to continue working and earning in the next 3 months then you are allowed to do so. If you do continue working you will not be able to claim universal credit.
There are some client's that are going to fall through the net.
1 - If you are a client who only started self employment after 5th April 2019 you will get no bonus.
2 - If you are a director of a small business that takes a small salary and dividends you will get the 80% furlough pay for your salary but no support for your dividends amount and no bonus for being self employment.
If you fall into this excluded group and have stopped all work we believe you are eligible to claim universal credit and if a sole trader, will get the grant in June too.
If applying for universal credit then you can receive an advance payment near enough immediately. The link to apply is:
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