Last week the Chancellor announced his Income Support Scheme for the self-employed, which covers 80% of profits up to £2,500 per month, with profits averaged over three years up to 2019. The move will offer a lifeline for many independent mobile catering businesses in the UK. Here we run through some of the details.
Who is considered self employed?
You are self employed if you operate as a Sole Trader or as a Partnership. If you operate as a Limited company then you are not considered to be self-employed.
I pay myself a small salary and a dividend at the end of the year – can I claim this?
No. If you are paying dividends then you are operating as a limited company and are not therefore self-employed. You could however Furlough yourself under the Coronavirus Job Retention scheme and get 80% of your salary.
I am employed and cater part time – am I eligible for this scheme?
You can only access this scheme if over 50% of your earnings come from self-employment. You may however be furloughed under the Job Retention Scheme via your employed role.
I have created my business post April 2019 – can I claim?
Unfortunately, no. If you established your business in the time since April 2019, then you are not eligible for this scheme.
I made more than £50,000 last year will I be eligible?
If your average profits over the last three years equate to less £50,000 then yes. If your average is higher then £50,000 over the last three years then no. If you have only operated for one year and made £50,000 or more in that period, then you would not be eligible for this scheme.
How much will I get?
You will get an average of the monthly profits that you have declared for the last three years - for example, if in year one you made £10,000, followed by a year two profit of £30,000 and a profit of £40,000 in year three, then that is an average profit of £80,000 divided by three, which is £26,667. This would then be divided by 12 months so £2,222.22 x three months equals £6,666.67 - 80% of this is £5,334.17. Note: this IS taxable so you would need to declare this on your next tax return.
I have been operating for more than a year but less than three years – what will I get?
You will get an average for time you have been operating; so if you have been operating for two years then you will get an average of those two years. For example, if in year one you made a profit of £10,000 and in year two you made a profit of £30,000, then your average would be £20,00. This would be divided by 12 months so £1666.67 per month x three months is £5,000 - 80% of this is £4,000. This IS taxable so you would need to declare this on your next tax return.
I haven’t yet submitted my tax return for the 2018/19 tax year – am I eligible?
Yes, but you need to submit your tax return. The government has extended the deadline for four weeks.
I have savings – am I able to claim on this scheme?
Yes. This scheme is not savings related unlike Universal Credit.
I stopped working in the middle of March 2020– am I covered?
Yes. You are covered for the full period.
I have recently quit my job to start up a business– what can I do?
If you left your job after the 29 Feb then go back to your old employer and ask them to re-employ you and then Furlough you under the Coronavirus Job Retention scheme on the basis that you will leave at the end of the scheme. It won’t cost them anything.
When will I receive my payment from the Self-Employed Income Support Scheme?
The government have said that all payments will be received by the beginning of June.
Why will it not be paid until June?
The Government needs to build a system to administer the millions of people who will need to claim, and unfortunately this will take time.
I can’t wait until June for money – what do I do?
You will of course need to find some access to cash. We will be producing advice on this shortly.
How will I receive payment?
If you are eligible, then HMRC will be in touch.
The Nationwide Caterers Association (NCASS) represents businesses in the mobile catering, festival, street food and independent restaurant sector in support of its 6,000 plus members. Daily counsel and measures have taken in working documents and business survival strategies including actions members can take if looking to adapt their business model to a food delivery business.
Find out more about NCASS here