Self-employed - the Self Employment Income Support Scheme (SEISS)

The SEISS will directly pay a taxable grant to the self-employed (including members of partnerships) based on 80% of your average monthly trading profits, paid out in a single instalment covering 3 months.

As of Friday 29th May the Chancellor has extended the SEISS for a final three-month period to 31st August 2020.

This means that the self-employed, who are eligible to claim, will have received six-months financial support from government.

This is averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month. In practice this equates to 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) that will be covered.

The Government believes that these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold and child tax credit limits).

The payment of the grant will not prevent the claimant from continuing to work, start a new trade or take on other employment including voluntary work.

As stated by the Chancellor on 29th May, applicants will still have to wait until the last month of the claim period, August 2020, to make a claim.

CHANGES ENACTED ON 29th MAY 2020

In regards to the changes announced, a bullet-point summary of the new announcement is set out below:

  • SEISS Extended for three months to 31 Augusts 2020
  • Applications covering June – August 2020 period will open in August.
  • Grant available will be 70% of eligible earnings (previous quarter 80%).
  • Maximum grant for the three-months will be £6,570 (Previous quarter £7,500).
  • Eligibility criteria remains unchanged.
  • A self-employed person can claim for the second grant, to August 2020, even if they had not claimed for the first grant.
  • More information on these changes will be published 12 June 2020.

If you are eligible to make a claim for this second grant under the scheme you will still be subject to the same rules regarding eligibility. These can be found below, with reference to HMRC’s own eligibility tool. Our Self Employment Income Support Scheme (SEISS) Calculator can also be found here.

If you did not claim for the first quarter, to May 2020, as your business at that time was not adversely affected, but will be affected in the quarter to 31 August 2020, it will be possible to claim for the second quarter.

And finally, claims for the first quarter (March-May 2020) will close 13 July 2020.

WHO CAN CLAIM

You can claim if you’re a self-employed individual or a member of a partnership and:

  • you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
  • you traded in the tax year 2019 to 2020
  • you intend to continue to trade in the tax year 2020 to 2021
  • you carry on a trade which has been adversely affected by coronavirus

There are further qualifications that need to be met in order to be fully eligible for the scheme. These include:

  • Self-employment must provide most of the claimant’s income. Your trading profits must be also be no more than £50,000 and at least equal to your non-trading income.
  • The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year).
  • If you’re not eligible based on the 2018 to 2019 Self-Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
  • If you’re not eligible based on the 2018 to 2019 Self-Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
  • Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.
  • Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies balance director shareholder drawings as low salaries with higher dividends.

As aforementioned, in order to claim a self-employed individual must have ‘been adversely affected by coronavirus’. In response to this there seems to be a pressing issue: ‘What happens if the self-employed individual has not lost any trading profits due to Covid-19?'

It is possible for some businesses that they do not lose any profits due to coronavirus as they still must keep shops open e.g. grocery, petrol stations, pharmacists. Currently these self-employed businesses may claim the SEISS grant as announced if eligible without calculating profit for the current month for their lost earnings. Nonetheless, when they would be completing their 2020-21 tax returns (including this taxable grant), they may need to repay some of this grant if their average earnings show that they did not lose any revenue. The requirements and this aspect have not been addressed in the guidance issued to date.

HMRC have also announced further information and clarity regarding circumstances that can affect your application and general eligibility criteria. These include:

  • if your return is late, amended or under enquiry
  • If you’re a member of a partnership
  • If you’re on or took parental leave
  • If you have loans covered by the loan charge
  • If you claim averaging relief
  • If you’re non-resident or chose the remittance basis
  • If you’re above the state aid limits

To assist you, we have created a simple SEISS Calculator – you will need to enter your Total Income for the past three years and your Self-employed Taxable Profits. Plus, some eligibility factors.

The limitations of the calculator are stated on the front sheet together with other details you should read before using. CLICK HERE for our SEISS Calculator

ELIGIBILITY TOOL

For checking eligibility, HMRC has provided an online tool that has been developed to find out if you’re eligible to make a claim. HMRC has been inviting customers to go online and check their eligibility for SEISS using this interactive tool. For the tool click HERE.

HOW TO CLAIM

The claims service will open on 13 May and is being delivered ahead of the original timetable. The claims process will be very simple, and those eligible will have the money paid into their bank account by 25 May, or within six working days of completing a claim. 

PLEASE BE AWARE THAT WE CANNOT MAKE THE CLAIM FOR YOU.

HMRC have confirmed that your tax agent or adviser (us) cannot make the claim for you. You must make the claim yourself. That is not to say that you cannot contact us asking for help or support; just that the claim must be submitted by yourself.

Currently the claiming process is online, but HMRC has acknowledged that for those unable to claim online an alternative way to claim will be available. They haven’t released information on this as of yet but assured that more information will be available soon.

When you make your claim, you’ll need your:

  • Self Assessment Unique Taxpayer Reference (UTR) number - if you do not have this please visit the HMRC page for finding a lost UTR number, which can be found HERE
  • National Insurance number - if you do not have this find please visit the HMRC website on how to get your lost National Insurance, which can be found HERE
  • Government Gateway user ID and password - if you do not have a user ID, you can create one when you check your eligibility online
  • Bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

AFTER YOU HAVE CLAIMED

Once the online check is complete, eligible customers will be given a date when they can submit their claim. They will also be encouraged to update their contact details so that reminders can be sent to notify when the online service will be available. You will be told straight away if your grant is approved. HMRC will then pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • The amount claimed
  • The claim reference number for your records
  • Evidence that your business has been adversely affected by Coronavirus

You will need to report the grant:

  • On your self-assessment
  • As self-employed income for any Universal Credit claims
  • As self-employed income and that you’re working 16 hours a week for any tax credits claims

For full details of the scheme, please visit HMRC’s dedicated SEISS page HERE

We hope that you have found this informative and useful.

As ever, we are here to help you.

The information that we have provided is for general purposes only and therefore does not constitute professional advice. Appropriate professional advice should be sought for individual circumstances before any further action is taken.