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30th March 2020Claiming a grant under the Covid-19 Self-employment Income Support Scheme – advice for musicians

You can use this scheme if you’re self-employed as an individual or in a partnership and have lost income because of coronavirus. You can apply as long as your 2018/19 self-assessment tax return has been submitted by 23 April 2020. You also need to have continued your activities as a professional musician in 2019/20, to still be “trading” when you apply, or to be in a position where you would have been trading except for Covid-19. Partners are treated in the same way as individuals, with calculations being based on their share of profits from the partnership.

You must also intend to continue trading as a professional musician in 2020/21 and to have lost trading or partnership profits because of Covid-19. Your self-employed trading profits must be less than £50,000 per annum, either in 2018/19 or on average in the three tax years 2016/17 to 2018/19, and also represent more than half of your overall income.

Most musicians do not regard themselves as traders but HMRC do. This scheme applies to all people with self-employed income of any sort, subject to the published rules.

As long as you began your professional activities before 6 April 2016, your profits for the years 2016/17, 2017/18 and 2018/19 will be averaged in order to calculate a monthly income figure on which the grant will be based. A grant will be payable of 80% of this monthly figure with the maximum payment set at £2500 per month for an initial period of three months. The grant, which is taxable, will be paid into your bank account, in one instalment.

An example might help:

Mr Jingle, a pianist and composer, made profits as follows and had no sources of income other than his activities as a musician:

2016/17    26000

2017/18    25000

2018/19    32000

Total           83000

Monthly average after 36 months £2306

Taxable grant payable 80% X £2306 X 3 Months = £5534.40

We do not know to what extent figures will be rounded up or down to the nearest pound.

Anyone who began their profession after 6 April 2016 will also have their profits averaged based on the number of months from commencement to 5 April 2019. Musicians who began their activities after 5 April 2019 will not be eligible for the scheme

You cannot apply for the scheme yet. HMRC say they will contact you if you are eligible for the scheme and invite you to apply online. This is likely to be in June 2020. If you have not heard from them by mid-June it will probably be best to lodge a claim. Looking on https://www.gov.uk/ may help.

Musicians who operate through limited companies cannot claim under this scheme although they may be able to claim a grant towards salaries paid under the PAYE system.

The condition that the self-employed income must be more than half the annual income means that many musicians who are also in employment or in receipt of pensions, or part time musicians, will not be able to benefit from the scheme. It provides a rough and ready means of compensating those who clearly rely on their earnings as a musician and ensures that any benefit accrues to those people who have correctly declared their income under self-assessment in recent years.

Any musician who has recently begun self-employment or with an income in excess of the £50,000 threshold will not be eligible and they are expected to rely on their savings, Universal Credit and the Business Interruption Loan Scheme.

If you have questions on this guidance, please contact us.

30 March 2020
The information contained in this guidance has been obtained from public sources and every attempt has been made to ensure its accuracy at the date of publication. In this ever changing environment, this information is subject to change and we will not accept liability for losses arising from changes in the law or the interpretation thereof.

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