What help is there for self employed musicians?
We completely understand that it’s been a worrying few-weeks as the COVID-19 crisis continues to develop. Less and less people were willing to go out, with some venues choosing to close their doors, and then it became an official lockdown with all venues forced to close their doors.
With no one to play for and nowhere to play, it is likely that you have already lost income and are unsure of when you can next play and earn some cash.
So, what financial help is available to you as the lockdown continues?
Last week, the Chancellor announced that the Government will roll out the Self-Employment Income Support Scheme, and the details are as follows:
Am I eligible?
You will be eligible if:
If you have only just started in self-employment and didn’t need to do a 2019 tax return, then it’s harsh as you won’t be eligible. They’re putting this in place to avoid lots of people suddenly claiming they’re self-employed. The 5 April 2019 tax return is the last official document that states whether someone is self-employed, so it’s the best they can do right now.
If you are a director of a limited company, you’re not going to be eligible for this scheme, because you pay yourself in salary, which is fine, but dividends do not count as self-employment.
How much will I get?
The grant will cover 80% of your average monthly profits, calculated over the 2017, 2018 and 2019 tax returns. If you didn’t need to do returns in all three years, they’ll use the average profits from one or two returns.
The most you can receive is £2,500 per month. You’ll get this if your profits were £37,500 per annum or more.
Can I still work?
Yes – you can. You’ll receive the grant even if you’re still working as a musician. You might not be able to play “real” gigs right now but you can be earning through recording or virtual gigs.
You simply need to confirm that coronavirus has affected your income.
How do I claim it?
HMRC will contact everyone who is eligible. They’ll check your eligibility by looking at your personal tax returns. When they do contact you, you’ll have to fill in an online form.
If you haven’t heard by 30 April, we recommend you give them a ring. For the moment, they’re very keen that you don’t contact them as it will delay the process.
Also, you should only fill in any details via the GOV.UK website. HMRC are warning of scammers who are likely to use this as an opportunity to contact you via phone/text/email to try and get you to give your bank details.
When will I get the cash?
The payments will be made in June 2020. You’ll get paid for all three months in one payment. This does cause some cash flow issues as you’ll get nothing until then.
There will be a six-month deferral on your personal tax Payment on Account due on 31 July. The payment date will now be 31 January 2021.
This will still have to be paid but, for now, it should help you with some cash that can be used elsewhere.
Residential mortgages are eligible for a three-month holiday if you apply for it. The Government are telling mortgage lenders to allow this, but commercial or rental premises will not be eligible for it. It’s also going to have to be paid at some point alongside the interest.
The self-employed, sole traders and partnerships are all eligible for this scheme. You need to have a business bank account and the details are as follows:
If you do want the loan, the first port of call would be your bank.
If you are VAT registered, you won’t have to pay any VAT in this quarter. Payments due between 20 March 2020 and 30 June 2020 do not need to be paid until 31 March 2021.
However, if you’re on a Direct Debit, you do need to cancel it so they don’t automatically take the cash.
Like the income tax Payments on Account, the VAT will still have to be paid but, for now, it should help you with some cash that can be used elsewhere.
Huge thanks to Jon Davies Accountants for putting this information together for us. If you have any questions please get in touch with the guys directly at 0151 665 0900 or email@example.com.
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