WWC - Coping with Coronavirus

IN THIS SERIES OF ARTICLES TO HELP EXPATS DEAL WITH CORONAVIRUS, PROACT SAM EXPLORES HOW EXPATS CAN PROTECT THEMSELVES, IDENTIFY AND EXPLOIT OPPORTUNITIES PRESENTED BY THE PANDEMIC.

Part 2 - UK Self Employed Tax Bailout

ProACT Sam looks at how self employed UK tax residents can benefit from the UK self employed tax bailout.

Many Expats work on a self employed basis, including those who are UK tax residents.

The UK have launched a business support scheme for these people during the current coronavirus situation.

There are winners and losers, but small self employed business will generally do very well.

With two provisos:

Firstly, UK tax returns must be up to date. The last UK full year tax return was due for the period to 5/4/19 and should have been submitted by January 2020.

If this return is not submitted, your business will not get help.

All UK self employed tax residents now have a few weeks to get these returns up to date, in order to be eligible for financial support.

Contact us to qualify for financial support

ProACT can help you prepare and submit a UK tax return 2019 now, so that you can qualify for financial support. The deadline is 23/4/20, so don’t hesitate on this.

Secondly, in qualifying for the financial support now, you will get help for your business, but it is likely you will be asked in-depth questions, allowing HMRC to review your status and the amount of tax you pay.

IR35 and Class 2 National Insurance reforms have been postponed in the last few years, but there is a clear indication that, despite the extra risk of being self employed, small businesses will pay a fairer share and higher amount of tax and national insurance in the coming years.

Take it for Granted

UK self employed should take the grants being offered.

The corona pandemic will impact all business in the coming months and years.

No matter how much your income is impacted, any eligible business can receive the grant.

This includes EU Expat tax residents in the UK.

Paid as a grant from the UK tax office HMRC, this income will be taxable at the year end, but not as a loan and repayable.

If your income goes down significantly, that income is effectively replaced. If it turns out that your income falls only a small amount and you have taken the grant, you will simply pay more tax.

There is therefore no downside to taking the grant.

How much is the grant for the self employed?

The grant will be for 80% of net income, averaged over the previous 3 tax returns, or less if you started trading after 2016. At least one full tax return is required.

There will always be winners and losers.

If your average net income was £15k per year for the assessed period, you qualify for a grant of £1000 per month. It will be paid for at least 3 months.

If earned income falls you pay the same tax.

If earned income falls just a little, your total income rises and you will then be required to pay more tax in the current year.

Restrictions for the self employed grant

This financial assistance is only for truly self employed , not for service company contractors.

And with a maximum net income of 50k per year.

As well as having submitted a 2018-19 UK return, the self employed applicant should be trading in the current year 2019-20, intending to carry on trading in the next tax year 2020-21, and have been trading and intending to trade through the corona crisis.

Last Chance Saloon

If you were self employed in 2018-19, but haven’t yet submitted your tax return, you only have until 23rd April to submit a return and be eligible for this grant.

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Act now! Contact ProACT to qualify for grants for the self employed

ProACT can help you prepare and submit a UK tax return for 2019 now, so that you can qualify for financial support. The deadline 23/4/20 so take action now!