Self Employment grant calculated on 18\19 self assessment, but only became self employed Jan 2019

william99999

Dear All,

My Self Employment grant has been calculated on my 2018/2019 tax submission. I became self employed in Jan 2019, to expand on this, I switched jobs from another employer where I was employed late 2018 and made the switch to self employed by applying for my Unique Tax Reference (UTR) number in Jan 2019. I have worked self employed and paid tax through my UTR right through 19/20 up until lockdown. 

My grant has been calculated on the 18/19 tax submission which has only Jan, Feb and March payments. The end of year amount is only three months worth of work, however the HMRC grant calculator has divided this by 12 to find the 'monthly average'.

As I have only three months worth of work in this year why have I been blanketed and had my end of year total divided by 12? surely to to find the monthly average (in which the calculator says the calculation is in aid of) it should be the year total divided by the amount of months worked?

Can I please reiterate that I was not employed for the whole year and only chose to work three months of it, I switched and became self employed with a new UTR number and so on in January.

Following the advice of a HMRC telephone adviser I submitted an online grant review form, but this was over three weeks ago and u haven't heard back yet.

I know I'm not the only person in this position and am keen to hear of anyone else's experience or any help.

Many thanks in advance.

poppy12345

Regardless of you only being self employed for 3 months of tha tax year they calculate it for the whole of the year. Unfortunately, it's how it worked out. Some examples here may help. https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme

ChloeCordelia

 I have appealed my grant amount and had an unchanged response from HMRC. Which took about 2 weeks to come back In a letter stating they had tried to call me! I’ve had no missed calls. I have now gone down the formal complaint route which was advised by a hmrc telephone advisor. She also advised me to contact my local MP. Which I have done.

My case is. I registered as self employed on 03/04/18 and filed a tax return with £0 trading profits for that tax year 17/18, 3 days before the end of that tax year.  thinking at the time it was the most honest thing to do! I then worked a full year and filed around £16k Trading profits for 18/19. They have calculated my grant on based 2 years, when I have 1 year and 3 days. But only one year with trading profits, the telephone advisor even said to me yes I can see your only income in the tax year 17/18 is from previous employment, This unfair flawed calculation means  I’ve basically got 40% of my income. As this was my first year of business I was already on a very low wage. I’m absolutely distraught over my financial situation. The amount I was granted for 3 months didn’t even cover 1 months out goings. I cannot return to work until at least the 4th of July. It 100% hasn’t been fairly calculated for 1000s of people. Why should we be penalised for when we started Self-employment in the tax year? There as so many flaws is the way the grants are calculated. Do I have a leg to stand on with £0 trading profits? I feel the only way to fix this is with a petition. 

poppy12345

ChloeCordelia said:

 I have appealed my grant amount and had an unchanged response from HMRC. Which took about 2 weeks to come back In a letter stating they had tried to call me! I’ve had no missed calls. I have now gone down the formal complaint route which was advised by a hmrc telephone advisor. She also advised me to contact my local MP. Which I have done.

My case is. I registered as self employed on 03/04/18 and filed a tax return with £0 trading profits for that tax year 17/18, 3 days before the end of that tax year.  thinking at the time it was the most honest thing to do! I then worked a full year and filed around £16k Trading profits for 18/19. They have calculated my grant on based 2 years, when I have 1 year and 3 days. But only one year with trading profits, the telephone advisor even said to me yes I can see your only income in the tax year 17/18 is from previous employment, This unfair flawed calculation means  I’ve basically got 40% of my income. As this was my first year of business I was already on a very low wage. I’m absolutely distraught over my financial situation. The amount I was granted for 3 months didn’t even cover 1 months out goings. I cannot return to work until at least the 4th of July. It 100% hasn’t been fairly calculated for 1000s of people. Why should we be penalised for when we started Self-employment in the tax year? There as so many flaws is the way the grants are calculated. Do I have a leg to stand on with £0 trading profits? I feel the only way to fix this is with a petition. 

If you started your own thread instead of asking on other peoples threads you may have more replies. Your question was answered here on other thread earlier today https://forums.moneysavingexpert.com/discussion/comment/77272442#Comment_77272442

Of course you can appeal and contact your local MP but it's very unlikely that the decision will be changed.

Grumpy_chap

william99999 said:

My Self Employment grant has been calculated on my 2018/2019 tax submission. I became self employed in Jan 2019, t

My grant has been calculated on the 18/19 tax submission which has only Jan, Feb and March payments. The end of year amount is only three months worth of work, however the HMRC grant calculator has divided this by 12 to find the 'monthly average'

ChloeCordelia said:

 My case is. I registered as self employed on 03/04/18 and filed a tax return with £0 trading profits for that tax year 17/18, 3 days before the end of that tax year.  thinking at the time it was the most honest thing to do! I then worked a full year and filed around £16k Trading profits for 18/19. They have calculated my grant on based 2 years, when I have 1 year and 3 days. 

Yes, that is how the rules have been set out and applied correctly.  It does not look at the start date of self-employment.

Chloe's case is a bit more extreme but, the perception from outside based on the tax return is that she started trading on 3rd April.  While she made no profits in those 3 days is perhaps not surprising as many businesses incur start-up costs so the first year of trading is less profitable than subsequent years.  The assumption would be that Chloe started trading on 3rd April and off-set her start-up costs against revenue in that period.  To have just added three days' of self-employment otherwise is a lot of extra complication in the tax return for no purpose.  Is the way the tax return how Chloe's Accountant recommended to proceed?