Self-Employment Support Scheme extended
The government’s Self-Employment Income Support Scheme will be extended, giving more security to individuals whose livelihoods are adversely affected by coronavirus in the coming months, the Chancellor announced on Friday 29 May 2020.
Those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase.
Further guidance on the second grant will be published on Friday 12 June.
Self Employment Income Support Scheme (SEISS)
On 4 May HMRC started to contact taxpayers who it believes are entitled to claim an SEISS grant, telling them to be ready to claim when the portal opens next week.
HMRC has also requested tax agents to help clients prepare, however please note tax agents will not be able to access the SEISS portal to make grant claims on behalf of clients.
Important points to note:
The initial contact to self-employed taxpayers is being made by email or text message if HMRC does not have an email address. HMRC has stated that only when they do not hold an email address or mobile phone number for the taxpayer will they send a physical letter, but this letter may not arrive until next week.
It is important to note that genuine emails and texts from HMRC do not include an active link to click on; they only inform the taxpayer to be ready to claim. Therefore, DO NOT provide any details to HMRC via email or phone. The details to be able to make the claim will be submitted via the SEISS portal only.
The fact that the taxpayer has received an initial contact about the SEISS grant from HMRC does not mean you will meet all the criteria to receive the grant. HMRC will have the information about your trading profits for the years to 2018/19, but to claim the SEISS you must also have traded in 2019/20 and be intending to trade in 2020/21.
HMRC is encouraging taxpayers to use its SEISS eligibility checker tool (https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference) to check whether they can claim.
Please also note that you are not required to use the checker tool in order to make a SEISS claim. However, if you do use it and provide an email address as requested for further correspondence, this may speed up the process of the claim. HMRC will use that email address to inform you exactly when the SEISS portal will be open for you to apply.
HMRC has also advised that agents should not use clients’ credentials to apply for grants on behalf of clients and that doing so may trigger HMRC fraud checks and delay payment of the grant.
The SIESS grant will be payable to taxpayers who meet the following conditions:
• registered with HMRC as self-employed
• submitted tax returns for 2016/17 to 2018/19 (or years within that period when trading) which include self-employed trading income
• was trading in 2018/19 and 2019/20
• is still trading in 2020/21 (or would be if it were not for the coronavirus shutdown)
• has lost trading profits due to coronavirus
• self-employed profits make at least half of their annual average income
• average self-employed profits for 2018/19 do not exceed £50,000 and were more than nil or
• average annual self-employed profits for 2016/17 to 2018/19 do not exceed £50,000 and were more than nil
How much you will receive?
If you are eligible, the taxable grant will be based on your average trading profit over the 3 tax years:
• 2016 to 2017
• 2017 to 2018
• 2018 to 2019
HMRC will calculate the average of your trading profits by adding together your total trading profits or losses for the 3 tax years and then will divide by 3.
The grant will be 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether.
HMRC has stated that the online service will show how the grant amount was calculated. The grant amount will be paid directly into your bank account, in one instalment.
How to claim?
The online service will be available from 13 May 2020. If you are eligible, HMRC will notify you the date you can make your claim from. If your claim is approved you will receive your payment within 6 working days.
When you are ready to make the claim, ensure you have the following information readily available:
• Self Assessment UTR
• National Insurance number
• 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 where you would like the grant to be paid into (only provide bank account details where a Bacs payment can be accepted)
You will also have to confirm to HMRC that your business has been adversely affected by coronavirus.
If you claim the grant HMRC will treat this as confirmation that you are below the state aid limits.
HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.
Once you have submitted the claim
Once you have submitted the claim, 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 tax return
• 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
We are ourselves issuing regular updates via our website and e-mail cannons. If you are not receiving these and would like to be added to the list please e-mail [email protected] with the subject “Add me to your COVID-19 e-mails”.