16 April 2020
The Self-Employment Income Support Scheme (SEISS) aims to match the employee reliefs under the Coronavirus Job Retention Scheme for those who are self-employed or in a partnership and have suffered a loss in income as a result of COVID-19.
Since the SEISS was announced on 26 March, there have been many questions about how the scheme works and who is eligible. Earlier this week, HMRC updated their guidance on claiming grants and also published guidance on how they will calculate total income and trading profits for the scheme.
About the Self-Employed Income Support Scheme
If you are self-employed or in a partnership and have suffered a loss in income, a taxable grant worth 80% of your average monthly profits over the last three years, up to £2,500 a month, will be available. The grant will be available to people across the UK for at least three months, and longer if necessary, however the money will be paid in a single lump sum, and will not begin to arrive until the start of June at the earliest.
Who can apply?
HMRC will use existing information to identify those eligible and will invite applications (you do not need to contact them). HMRC expects to start contacting those eligible by inviting them to claim using the GOV.UK online service, although an alternative method will be available for those unable to claim online. HMRC are also warning individuals to be alert to scams and advising not to respond to any texts asking you to click on a link, or telephone calls asking for personal details.
To be eligible, more than half of your income needs to come from self-employment. The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
You will also need to ensure that you have filed a Self Assessment tax return for the year ended 5 April 2019 and you must have traded in the tax year ended 5 April 2020. If you have not submitted a 2019 return yet, HMRC will take into account submissions before 23 April 2020. HMRC will only accept claims from those who are trading when they apply, or would have been except for Coronavirus, and trading profits have been lost due to the pandemic.
If you started trading between 2016 and March 2019, HMRC will take into account those years for which tax returns have been made in assessing the self-employed income. If you have not submitted Self Assessment tax returns for all three years, HMRC will work out your average trading profit based on continuous periods of self-employment, which will be either:
- the tax years 2017 to 2018 and 2018 to 2019
- the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017
Calculating total income and trading profits
For trading profits, HMRC will use the figures on your tax returns for your total trading income, then deduct any allowable business expenses and capital allowances. Any losses carried forward from earlier years will not be offset against the trading profits calculated, although any losses incurred in the three years under review (ie. 2016 to 2019) will be deducted in calculating your average trading profits for those years.
If you have more than one trade in the same tax year, HMRC will add together all profits and losses for all these trades to work out your trading profit. If you traded for more than one year, to work out your average trading profit HMRC will add together all profits and losses for all tax years you’ve had continuous trade. Further details of this guidance is available here.
How do I find out more?
The grant will be subject to income tax and national insurance contributions, but that is in line with the Coronavirus Job Retention Scheme (CJRS) for furloughed employees. For more of the detail behind the Self-Employment Income Support Scheme, please read our SEISS FAQs within our COVID-19 advice and guidance section on our website.
We will be continuing to provide our summaries of the Government announcements as they relate to you and your business. If you have any queries or concerns in relation to applying for the SEISS, or just generally in relation to your way forward through this coming period, please speak to your usual UHY contact or contact us via our online form.
