This information is relevant for the self-employed or partnerships only.
Government have recently issued further detailed guidance around the Self-Employed Income Support Scheme (SEISS), the aim of which is to support self-employed individuals who have lost income due to COVID-19.
The general headline of the measure is that self-employed people will receive a grant of 80% of their trading profit, to a maximum of £2,500 per month for 3 months. The payment is likely to be a single lump sum which will be received at the end of June although the period may be extended if needed.
In order to qualify, you will need to be self-employed or in a partnership and you:
- have submitted a UK Tax return for the year ended 5 April 2019
- you have traded in the tax year ended 5 April 2020
- you are continuing to trade, or would be if not for COVID-19
- you intend to continue to trade in the tax year ended 5 April 2021
- you have lost trading profits due to COVID-19
- and either
- your trading profits for the year ended 5 April 2019 were less than £50,000 and more than half of your total income is derived from these trading profits
- Your average trading profits for the years ended 5 April 2017, 5 April 2018 and 5 April 2019 average less than £50,000 and more than half of your total income is derived from these trading profits
Note: If you started trading between 6 April 2017 and 5 April 2019 then only those years will be used in any averages.
Anyone who has not yet filed their 2019 tax return (the usual deadline for which was 31 January 2020) will have until 23 April 2020 in order to qualify for the above.
The SEISS grant will therefore not be available to individuals who:
- have average trading profits in excess of £50,000
- have not submitted a 2019 tax return
- received less than half of their income from trading profits
- have already ceased trading permanently
- have commenced self-employment or joined a partnership after 6 April 2019
Note: Property letting businesses are not regarded as a trade and therefore landlords will not qualify for the SEISS grant unless they have a secondary source of trading profits which is more than 50% of their total income. At this point, the letting of furnished holiday accommodation is unlikely to be included although it is treated as a trade for certain tax purposes.
What you need to do now
You don’t need to do anything at this stage as HMRC have said they will identify those who are eligible and then you will be invited to apply for payment online, currently expected around mid May. As the system is only in early development we cannot be sure at this stage what this online application will entail.
It is not clear if this ‘invitation’ will be made by letter but it certainly will not be by email or text message. It is important that at this time you do not get taken in by scammers who email, text or call offering money from HMRC who then ask for bank details. Please do not reply or click on any link in an email or text which claims to be from HMRC.
Note: The current guidance suggest that the ONLY way to apply will be through the gov.uk online service although it is likely those who have difficulty with this may have access to an alternative method. If you do not have a personal gov.uk account then we recommend you set one up as soon as possible. This process involves HMRC sending you an activation code via post and as we anticipate that there will be a vast number of people applying for accounts we suggest starting the process sooner rather than later.
What will you get
The current guidance suggests that HMRC will pay 80% of this average monthly profit for the 3 months this directly to your bank account. Due to significant amount of work which goes into creating a system such as this, it is likely to be paid in early June in one single instalment.
When announcing the scheme the Chancellor admitted that some people would unfortunately miss out but that, due to the speed at which the system needs to be implemented he ‘would not let perfection be the enemy of the good’. He also highlight that for those who do miss out may still be able to get help through some of the other measures announced such as universal credit extensions, VAT and tax deferments or government backed loans.
Things to consider
It has been made clear that the SEISS grant will be subject to Income Tax and Class 4 National Insurance and thus reportable on your tax return for the year ended 5 April 2021. We therefore encourage recipients to treat this money as they would any money invoiced and received from a customer. The grant will not be subject to VAT.
As this guidance will be updated by the government from time to time we encourage everyone to keep checking the gov.uk website – https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
If you would like to talk to us about your current circumstances please call us on 0121 550 8525. We’ll be happy to talk you through some options based on your individual needs. Alternatively, please send us a message using the form on our contact us page.
Please note that during this time, we are experiencing a high number of enquires. We are responding to everyone, however it may take longer than normal. We appreciate your patience.