Taxable grant: What is a taxable grant?

The government has announced a scheme for the self-employed to cover the money lost during the coronavirus outbreak. The scheme allows individuals to claim a taxable grant worth 80% of their trading profits. This means you could get a maximum amount of £2,500 a month for the next three months. The three months could be extended if needed.

What is a taxable grant?

Grant income can take many forms, including government grants.

Grant income is an income received by you or your company, for which you do not have to provide anything in return.

Grants are normally taxable income, just like any other income.

The Government have agreed to give out taxable grants to the self-employed who have suffered losses due to the impact of COVID-19

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Who is eligible for a taxable grant?

You can apply for the grant is you are a self-employed individual or a member of a partnership and you:

  • Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-19

If you want the grant, your self-employed trading profits must also be less than £50,000, and more than half of your income must come from self-employment. This is determined by at least one of the following conditions being true:

  • Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

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How much will I get with a taxable grant?

The website says your taxable grant will be 80% of the average profits from the tax years (where applicable):
2016 to 2017
2017 to 2018
2018 to 2019

HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable to work out the average.

They will use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

The government will pay the grant directly into your bank account in one instalment.

How do I apply for a taxable grant?

Unfortunately, you can’t apply for the scheme yet.

HMRC will contact you if you are eligible for the scheme.

You will then be invited to apply online.

Once HMRC has received your claim, you will be contacted about how much you will receive.

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