In the wake of growing criticism of the Government over a lack of support for the UK’s 5 million self-employed workers who have been severely impacted by the coronavirus pandemic, the Chancellor has now announced the Self-employed Income Support Scheme (SEISS).
HEADLINE MEASURE: Self-employed workers can claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months.
The key points are:
- The grant is worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months
- Self-employed trading profits must be below £50,000
- HMRC will use data from 2018-19 returns to identify if you are eligible for the grant
- Income from self-employment must account for more than half of your income
Check your status
You will qualify for a grant from the Self-employed Income Support Scheme if:
- your trading profits/partnership trading profits in 2018-19 were less than £50,000 and made up more than 50% of your total taxable income
- your average trading profits in 2016-17, 2017-18, and 2018-19 were less than £50,000 and constituted more than half of your average taxable income in the same period
If you started trading between 2016 and 2019, HMRC will work on data from Self-Assessment tax returns during that period.
Who can apply?
HMRC will use data from 2018-19 tax returns to confirm eligibility for the grant. Late returns filed before 23 April 2020 will be risk assessed in the usual way. If not already submitted, Income Tax Self-Assessment tax returns for 2018-19 must be filed by 23 April 2020
The scheme is open to self-employed individuals and members of a partnership who:
- have submitted an Income Tax Self-Assessment tax return for 2018-19
- have traded during the 2019-20 tax year
- are still trading when they apply for a grant, or would be trading except for COVID-19
- intend to continue to trade in 2020-21
- have lost out on trading profits due to COVID-19
How much will I receive?
- HMRC will provide a taxable grant equating to 80% of your average profits from the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019 (where applicable).
- It will be calculated by adding together the total trading profit for the 3 tax years (where applicable) then dividing by 3 (where applicable). This figure will then be used to calculate a monthly amount.
- The maximum payable is £2,500 per month for 3 months to a maximum of £7,500.
- HMRC will pay the grant directly into your bank account as a single lump sum.
If you claim tax credits, you’ll need to include a grant from the Self-employed Income Support Scheme in your claim as income.
If you are eligible for support, from 4 May, HMRC will begin contacting you and invite you to apply online.
HMRC is also inviting customers, or their agents, to go online and check their eligibility for SEISS.
In order to receive quick confirmation from the eligibility checker, individuals should:
- have their Unique Taxpayer Reference (UTR) and their National Insurance Number to hand
- make sure their details are up-to-date in their Government Gateway account
The claims service will open on 13 May and the process will be very simple. Those eligible will have the money paid into their bank account by 25 May, or within six working days of completing a claim.
The scheme can only be accessed via GOV.UK
Be aware of a growing number of scams. If someone texts, calls or emails you, claiming to be from HMRC and says you can claim financial help or tells you that you are owed a tax refund and asks you to click on a link or to give your name, credit card or bank account details or other information, do not respond.
Other aid for the self-employed
Remember that the Government has already announced a package of measures to help self-employed workers:
- Self-Assessment income tax payments due in July 2020 can be deferred
- VAT due from 20 March 2020 until 30 June 2020 can be deferred
- Grants are available for businesses that pay little or no business rates
- You can claim increased amounts of Universal Credit
- New Business Interruption Loan Scheme
Directors of their own company who are paid through PAYE may be able to apply for support via the Job Retention Scheme.
The full package of Government support announced to date, along with ongoing updates, is available at: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
As further details on the support for workers and businesses are released, we will update you as soon as possible. Please download the Howards app for immediate updates straight to your mobile device. You can also keep yourself informed about the latest developments by checking out our website and social media feeds.