Update on Government support for self-employed
The portal to claim the second grant through the Self-Employment Income Support Scheme (SEISS) opens in August 2020. The deadline for claiming will be 19 October 2020.
The Government has so far announced support for self-employed taxpayers whose business has suffered due to the coronavirus pandemic in the form of two grants:
- Two separate taxable grants are claimable:
- First grant for the period ending 13 July 2020.
- Second grant for the period from 14 July 2020.
- The first grant payable is the lower of:
- £7,500 and
- 80% of your average monthly profits
- The second grant payable is the lower of:
- £6,570 and
- 70% of the same average profits.
Both grants are available to self-employed individuals and are based on their average taxable profits in the tax years 2016/17, 2017/18 and 2018/19. The scheme is limited to businesses which have reported up to £50,000 in business profits. Also, the individual must receive most of their income due to being self-employed.
You can claim the second grant regardless of whether you claimed the first grant, but the deadline to claim the first grant is 13 July 2020.
Here is the link to check you are eligible and to apply for the first grant: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#eligible
You’ll need your Self-Assessment Unique Taxpayer Reference (UTR) number and your National Insurance number. You will also have to set up your Government Gateway User ID and password.
How do I decide if my business is adversely affected?
Your business is considered to be adversely affected by the coronavirus pandemic if, for example, you:
- are unable to work because you are shielding,
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
Have you had to scale down or temporarily stop trading due to Coronavirus? Or have you incurred additional costs because your business practices have been affected?
This might include where:
- your supply chain has been interrupted
- you have lost or failed to win customers or clients
- your employees have been or still are unable to come in to work
- you had to buy protective equipment so you could trade following social distancing rules
Claims for the first three months commenced on 13 May 2020. They resulted in payments to Self Employed businesses arriving promptly within 6 working days of claims being made.
Should you receive texts, calls or emails claiming to be from HMRC, telling you that you are entitled to a tax refund, it is a scam. Do not to click on a link or give any personal information. These should be emailed to [email protected] and should then be deleted.
What if you fail to qualify?
Sadly, businesses which started to trade after the end of the 2018/19 tax year are not eligible for the grant. You must also have traded in 2019/20 and intend to continue trading in 2020/21.
There are two different strands to SEISS, and it may be that one is not met. Firstly, check whether you are eligible by reference to trading dates and filing of tax returns. Secondly, to work out what is payable, you need to meet one of the following 3 conditions to be eligible for the scheme:
- Your trading profits are between £0 – £50,000 for 2018-19. And those trading profits are more than half of your total taxable income for that year. Or…
- Your average trading profits for the three years 2016-17, 2017-18, and 2018-19 are between £0 – £50,000. And your average trading profits are more than half of your total taxable average income for those same years. Or…
- If you did not trade in 2016-17, your average trading profits/partnership trading profits for the two years 2017-18, and 2018-19 are between £0 – £50,000. And your average trading profits are more than half of your total taxable average income for those same years.
We have seen cases where you are eligible under the first strand and not under the second.
If you fail to qualify under the SEISS, an alternative is to claim universal credit. Or you can check whether your local authority has any hardship funds. If you employ staff, you must have made a claim under the first Job Retention Scheme. There may also be loans which would benefit you, such as the Bounce Back loan which is 100% Government backed.
New strand to benefit self-employed parents
This was announced on 17th June and added to the scheme on 26th June. Self-employed parents may be able to claim if their trading profits dipped in 2018/19 because they took time out to have children.
Parents, including adoptive ones, who took time out of their business to care for a baby within the first 12 months of the birth of the child or within 12 months of an adoption placement, can now use either their 2017-18 or both their 2016-17 and 2017-18 self-assessment returns as the basis for their eligibility for the SEISS.
They will still need to meet the other standard eligibility criteria for support under the SEISS.
You can learn more about the SEISS here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme.