Self-Employment Income Support Scheme (SEISS)
Whilst this was initially announced in the briefing on 26 March, the scheme is now underway. HMRC has begun to contact 3.5 million taxpayers who may be eligible for the government’s self-employment income support scheme (SEISS). The service is due to be operational on Wednesday 13 May, with payments reaching bank accounts six working days after a claim is made.
The key points
- The grant is worth 80% of trading profits to a maximum of £7,500 (to cover three months’ profits) in a single instalment
- Self-employed trading profits must be below £50,000
- HMRC will use data from your 2018-19 returns (submitted in April 2020) to identify if you are eligible for the grant
- Income from self-employment must account for more than half of your income
- Your business must have been adversely affected by coronavirus
If you are eligible for support, HMRC will begin contacting you this week 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.
This scheme brings the self-employed parity with the Coronavirus Job Retention Scheme, where the government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the outbreak.
The scheme can only be accessed via GOV.UK
Bounce Back Loans now being paid
The Bounce Back Loan Scheme (BBLS) was announced a week ago but went live on May 4. Targeted at small and micro businesses across all sectors, it is reported that the first funds are being paid in under seven hours of an application being made. This funding choice is ideal for smaller businesses who fell through the cracks on the Coronavirus Business Interruption loan scheme if applying for under £50,000.
BBLS is being delivered by lenders accredited by the British Business Bank for this scheme. Loans range from £2K up to 25% of the business turnover (to a maximum of £50K).
Because BBLS comes with a 100% government-backed guarantee, together with a standardised application form, applications are being processed quickly. With the interest rate capped at 2.5 % and a 12-month repayment and interest holiday, this source of finance is both guaranteed and affordable for most.
The key points:
The Bounce Back Loans Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.
- Up to £50,000 loan: Loans will be from £2,000 up to 25% of a business’ turnover or £50,000, whichever is lower.
- 100% guarantee: The scheme provides the lender with a government-backed, full guarantee (100%) against the outstanding facility balance, both capital and interest. The borrower always remains 100% liable for the debt.
- Interest rate: The government has set the interest rate for this facility at 2.5% per annum, meaning businesses will all benefit from the same, low rate of interest.
- Interest paid by government for 12 months: The government will make a Business Interruption Payment to the lenders to cover the first 12 months of interest payable, so businesses will benefit from no upfront costs.
- No principal repayments for first 12 months: Borrowers will not have to begin principal repayments for the first 12 months, thereafter capital will be repaid on a straight line basis.
- No guarantee fee for businesses or lenders to access the scheme
- Finance terms: The length of the loan is for six years but early repayment is allowed, without early repayment fees.
- No personal guarantees: No personal guarantees are allowed, and no recovery action can be taken over a principal private residence or principal private vehicle.
Whilst there are no real guidelines on how funds are to be used, business owners need to use the funds smartly and spread over several months to ensure continuity of trading.
The best source of information on this is the British Business Bank’s website. The application process is reportedly straight forward. You can apply here, by clicking on the relevant icon for your business.
We have issued guidance on all support available to smaller businesses during this time. Remember that the other support available to you includes:
- income tax deferrals
- rental support
- Universal Credit
- access to mortgage holidays
- various business support schemes the government has introduced to protect businesses during this time
- VAT payment deferrals
The situation remains fluid and HM Revenue & Customs is updating its guidance regularly. For assistance with any aspect of guidance for small business, contact us on 01785 243276.