Background
The new Self-Employment Income Support Scheme (SEISS) is available to provide financial support for individuals who are self-employed or a member of a partnership, who meet the eligibility conditions and have been adversely affected by coronavirus (COVID-19). The SEISS will enable taxpayers to claim a taxable grant of 80% of average monthly trading profits, paid out in a single instalment covering 3 months, capped at £7,500 in total.
The scheme will officially be launching on 13 May 2020 and the Government’s eligibility check for this scheme is available now. HMRC are already contacting taxpayers who may be eligible to claim. This latest guidance has also confirmed that agents will be unable to make a claim on behalf of taxpayers so individuals will need to make their own arrangements to make a claim.
Detail
Under the current guidance SEISS will only be available to eligible individuals who are self-employed or a member of a partnership as long as certain conditions are met.
Who can make a claim?
Individual taxpayers can make a claim for SEISS if they meet the following conditions:
- they traded in the tax year 2018/19 and submitted their Self-Assessment tax return on or before 23 April 2020 for that year;
- they traded in the tax year 2019/20;
- they intend to continue to trade in the tax year 2020/21; and
- they carry on a trade which has been adversely affected by coronavirus.
Eligibility for the scheme:
If taxpayers have established that they can make the claim, the conditions for eligibly for SEISS are based on their 2018/19 Self-Assessment tax return trading profits as follows:
- They must be no more than £50,000;
- They must be at least equal to your non-trading income;
- If they are not eligible based on the 2018/19 Self-Assessment tax return, HMRC will then look at the tax years 2016/17 and 2017/18.
Taxpayers can access HMRC’s eligibility checker on the following link https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference where taxpayers will be required to add their Tax Reference UTR and National Insurance number.
How much will be paid?
Taxpayers will get a taxable grant based on their average trading profit over the 3 tax years; 2016/17, 2017/18 and 2018/19. HMRC will work out the average trading profit by adding together the total trading profits or losses for the 3 tax years, then dividing it by 3. The grant will be 80% of their average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 in total. The online service will tell the individual how HMRC have worked the grant out when the application is made.
How does a taxpayer make a claim?
Taxpayers will need to have the following details to hand to make a claim:
- Self-Assessment UTR;
- National Insurance number;
- Government Gateway user ID and password;
- Bank account number and sort code you want HMRC to pay the grant into. This must be a bank account details where a Bacs payment can be accepted.
Individuals will also have to confirm to HMRC that their business has been adversely affected by coronavirus and if the grant is claimed HMRC will treat this as confirmation they are below the state aid limits.
The HMRC online service will be open to taxpayers on a staged basis from 13 to 18 May 2020 and HMRC will tell them the date they can make their claim from and once the claim is approved, HMRC expect to make payments from 25 May 2020.
Practical issues to consider when making a claim for SEISS:
- If taxpayers have other income such as from pensions, rental profits or large dividends they may not be eligible;
- Those that are not eligible for SEISS may need to seek alternative support;
- The claim must be completed personally as it is not possible for agents to process the claim on their behalf;
- If individuals do not have a Government Gateway ID it can be sent to them by email as the first step of the scheme process from 13 May 2020 onwards. Individuals should not apply for this now as the ID may be sent out in the post and may delay a claim;
- HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate;
- Anyone unable to claim online can use a telephone based application, further details are awaited;
- The grant will be included as taxable income in 2020/21;
This is only an outline of the SEISS and further details about the claim can be found at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme.
Our office premises remain closed however our staff are working from home as much as possible and are contactable either by e-mail or by calling the normal office number.
Should you have any concerns regarding cash flow or any other query relating to finances in the current situation, please speak to your usual contact at the firm.
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