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The Self-employment Income Support Scheme
The Chancellor has announced a new Self-employment Income Support Scheme (SEISS) to support self-employed people who have been adversely affected by COVID-19.
The Government has updated its page on the Self-employment income support scheme. If you are self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.
The scheme is now closed for claims for the first grant.
The scheme has been extended. If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you will be able to make a claim for a second and final grant from 17 August 2020.
The scheme allows you to claim a second and final taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.
As with the first grant HMRC will contact you if you’re eligible.
HMRC will work out your eligibility for the second grant in the same way as the first grant.
You can make a claim for the second grant if you’re eligible, even if you did not make a claim for the first grant.
HMRC have announced that the claims system for the self-employed will open on 13th of May, with payments due to be paid to taxpayer bank accounts within 6 working days of making a claim.
Ahead of this, HMRC will be contacting taxpayers who may be eligible from 4th of May, to invite them to check their eligibility, and provide details of how to claim.
Taxpayers can check their eligibility by going to this link, entering their 10 digit UTR number and National Insurance number. If eligible, taxpayers are then invited to check and update their contact details, to help avoid any delay in the claim being paid.
The vast majority of claims will be made using HMRC’s dedicated online system, and can only be made directly by taxpayers – at present, agents are not able to make a claim on behalf of their clients. Those unable to access HMRC’s online system are to be offered another way to claim, but this has not yet been set out by HMRC.
In addition to the various income-related criteria that HMRC have now reviewed, your business must have been adversely affected by coronavirus for a claim to be valid. HMRC will ask taxpayers to confirm this as part of the application process.
Please contact us if you would like us to check your eligibility for the scheme, or if you need any assistance in making the claim in due course.
The govenment website GOV.UK has further details on their dedicated page.
The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits 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 a recent briefing note from the Institute for Fiscal Studies, it was suggested that the £2,500 figure (which also applies to the employees’ Job Retention Scheme) is the maximum payment that will be made, not the maximum earnings that are protected, i.e. 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) will be covered.
- The initial payment term of the SEISS grant will be “at least three months”.
- The payment of the grant will not prevent the claimant from continuing to work.
- The SEISS will be restricted in three ways:
1. Self-employment must provide the majority of the claimant’s income. It is unclear how this is calculated.
2. Trading profits either:
- are less than £50,000 in 2018/19; or
- trading profit was less than £50,000 averaged over the three tax years from 2016/17.
According to the Chancellor, 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).
3. The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.
Self-employed people do NOT need to get in touch with HMRC as the scheme isn’t yet open for applications. HMRC will contact eligible customers by the beginning of June, inviting them to apply.HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”.
- Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.
- 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”.
Unfortunately, we are aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, please do NOT respond.
HMRC will never contact you out of the blue to ask for these details.
The government has also introduced the following help for the self-employed:
- Deferral of Self Assessment Income Tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- Grants for businesses that pay little or no business rates
- Increased amounts of Universal Credit
- Business Interruption Loan Scheme
If you have any questions or would like to discuss these measures further, please email your Argents contact.
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