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Government’s Self Employed Income Support Scheme

On 30 April 2020 the Treasury gave statutory footing for the Government’s Self Employed Income Support Scheme (SEISS).  HM Revenue and Customs (HMRC) has already begun contacting customers who may be eligible for the SEISS and have announced that its claim service will now be open on 13 May, ahead of its original timetable.  Money is to be paid into bank accounts by 25 May, or within 6 working days of completing a claim.

What is SEISS, how will it work, and will I be eligible?

Under the SEISS, self-employed workers will be able to apply for a taxable grant of 80% of their average monthly trading profits, up to a maximum of £2,500 per month, to combat a loss of income due to the coronavirus pandemic.  The amount of the grant will be capped at £7,500.  As it is a grant, you will not have to pay it back.  However, you can only claim if your trade or business has been adversely affected by the coronavirus.

The grants are decided on your profits over the last 3 tax years.

So, what is the eligibility criteria:

  • You must have completed and filed a tax return in one of the three relevant years (2016/17, 2017/18 and 2018/19), however you need to have traded in 2018/19, 2019/20 and intend to trade in 2020/21.
  • You must earn more than 50% of your total income from self-employment. This must have been the case for either you 2018/19 tax return or, if not, the average of your 2016/17, 2017/18 and 2018/19 tax returns.
  • Your average trading profit must be less than £50,000/year. The Government will first check your 2018/19 tax return.  If that meets the requirements i.e. it showed that you earned less than £50,000 in that year, then you’ll be eligible.  However, if you earned more than £50,000 (or earned less than 50% of your income from self-employment) in 2018/19, the Government will then look to your 2016/17 and 2017/18 tax returns.  If on average over the three years you earned less than £50,000, then you will still be eligible.

How do I claim?

If you are eligible for SEISS then HMRC will contact you this week, either by letter, text or via email, informing you of the date and time you’ll be able to make a claim.  The claims service is set to open on Wednesday 13 May, with payments said to reach accounts from 21 May, with most people receiving them by at least 25 May.

HMRC is also inviting customers to go online and check their eligibility for SEISS using the online tool which is available at https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference

To use the tool, you will need your:

  • Self-Assessment Unique Taxpayer Reference (UTR) number; and
  • National Insurance Number.

If you are eligible to claim, you will need to go online to make the claim.  You will need your:

  • Self-Assessment UTR;
  • National Insurance number;
  • Government Gateway user ID and password;
  • Bank account number and sort code for the account that you want the payment to be made into.

When making the claim you will have to confirm to HMRC that your business has been adversely affected by coronavirus.

After you have claimed

Once you have submitted your claim, you will be told straight away if your grant is approved and HMRC will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • The amount claimed
  • The claim reference number
  • Evidence that your business has been adversely affected by coronavirus

If I make a claim, do I have to stop working?

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

For more information on the issues raised in this article or if you require further information or advice on how COVID-19 may be affecting your business, then please contact a member of our corporate and commercial team on 01524 548494 or 01228 552600.

This alert does not provide a full statement of the law and readers are advised to take legal advice before taking any action based on the information contained herein.

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